Ladies and gentlemen, thank you for standing by. Welcome to the Zhihu Inc. Second Quarter 2021 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a Q&A session. 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 Second Quarter 2021 Financial Results Conference Call. Joining us today are Mr. Zhou Yuan, our CEO and Chairman of the company, 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 the definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results, please see the earning release issued earlier today. A webcast replay of this conference will be available on our website at ir.zhihu.com.
I will now turn the call over to Mr. Sun Wei, our CFO.
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 Second Quarter Earnings Conference Call. Our user base continued its rapid growth momentum during the second quarter. Our average MAUs reached 94.3 million, up 46% year-over-year. Of which, over 96% are mobile MAUs. Meanwhile, we continue to increase our platform's high-quality content offerings. As of June 30, the cumulative pieces of content on our platform reached 420 million, including 368 million questions- and- answers, representing a year-over-year increase of 48% and 43%, respectively. In the second quarter, our average number of monthly active content creators was 3.6 million. Within this number, we saw a 75% year-over-year increase in the average number of monthly video content creators.
In the quarter, our content-centric monetization approach continued to propel robust growth, evidenced by a 144% year-over-year increase in revenue to RMB 338 million and a 121% year-over-year increase in average monthly paying members to 4.7 million. Our achievements in the second quarter are ultimately an outgrowth of our founding belief, which continue to be our long-term guiding force. By building a high-quality, content-centric community characterized by reliability and trustworthiness, we have been able to fuel healthy user growth and outstanding community engagement. As our user numbers grow, the natural extension of user demand and valuable supplements to our content library in terms of new varied formats have expanded our content-centric monetization channels and nurtured the flywheel effect of our ecosystem. In the second quarter, we further upgraded our high-quality community content standards by introducing sense of fulfillment as a new benchmark in evaluating content value on Zhihu platform.
As a result of promoting content with a sense of fulfillment and our strong efforts to build brand awareness, we saw a remarkable growth in younger demographics from various cities, as well as a significant increase in cross-generational user interaction. We believe our efforts and achievements in the second quarter enhanced our solid foundation for robust long-term development. Our content offerings continued to grow rapidly in the second quarter. In the process of achieving rapid growth, it is vital to continually maintain a high-quality user experience. Towards this end, and as I mentioned in our first quarter earnings conference call, we have continued to optimize our content structure by supporting high-quality content and handling low-quality content. In the second quarter, we further refined our assessment standard for quality content by introducing what we call the sense of fulfillment standard.
We believe content with a sense of fulfillment standard displays one or more of the following characteristics: broadening horizons, providing solutions, and resonating with minds. Based on this assessment, we upgraded our distribution algorithm for video, as well as graphic and text content, to encourage more creation and submissions of content meeting this criteria, and ensure that once produced, it achieved higher exposure and greater traffic allocation. We believe this will not only empower content creators with more views, but also encourage more creation of high-quality content with a sense of fulfillment, thus creating a virtual cycle and a self-reinforcing content ecosystem. Aligned with a sense of fulfillment standard, we allocate a high distribution weight to a large volume of unique, high-quality science content on Zhihu's platform. This further solidifies the science category as a strategic cornerstone content vertical on our platform.
In our recently held event, Seeking Answers in Science, subject content received over 10 million interactions and over 100 million page views. Top-tier content from professionals and experts enables users to truly broaden their horizons and gain a real sense of fulfillment. It's important to note that content with the ability to broaden horizons can be more than just hardcore knowledge. It can also be just interesting and instructive content, such as content that inspires further explanation, as illustrated by those found during our recent Children's Day event. Examples of such items include, "What should I do when a giraffe's ears are itchy?" "Can we catch light?" As well as consumption tips produced by fashion editors answering the question: Why are the majority of luxury goods produced in Italy and France?
Second, we believe content that helps users solve problems and make decisions also confers a sense of fulfillment. Nowhere is this more evident than in a recent natural disaster in China. This July, Zhengzhou, a city in Henan province, suffered catastrophic flooding that caused tragic loss of life and devastating property damage. In an effort to help, Zheng Haoyuan, a Zhihu user and content creator from the northern city of Harbin, uploaded a detailed self-help manual for rainstorms. It was quickly upvoted, forwarded on Zhihu, and received over 30 million views in just a few days. This manual attracted nationwide attention, generated a robust discussion, and was also reported by multiple media outlets such as CCTV News, Guancha.com, and others. The instantaneous national exposure of the manual and the collective discussions effectively helped many people in real time suffering from this disaster.
Since then, in-depth discussions have searched a wide spectrum of disaster-related content verticals, including real-time disasters in progress, precautions for post-disaster reconstruction, including commercial insurance claims, how to get clean water with self-made devices, meteorological science-related knowledge, and the popularization of secondary disasters. Through this experience, we saw a beautiful example of how premium content created by Zhihu community was used in an instrumental way to help provide solutions, relief, and bring a sense of comfort to those in need during a critical time of disaster. We are proud that through the resources enabled by our platform, we were able to meaningfully contribute to the social responsibilities we uphold, both in times of crisis and on an ongoing basis as a leading corporate citizen. In addition to emergency assistance, Zhihu users are also encouraged to find solutions for their everyday real-life problems, such as common purchasing decisions on our platform.
During the recent popular 618 Shopping Festival held in June, we are encouraged to see the consumption-related content on Zhihu help users of all ages find their favorite item through high-quality content, which highlighted professionalism, rationality, high technology, and novelty. While users are having fun on our platform, they also enjoy the journey of discovering the right product for them and at the best price. Strong user resonance is the third important characteristic of content that would meet our sense of fulfillment standard. During the Olympic Games, the question, "What do you see in the Tokyo Olympics that is more important than a gold medal?" enjoyed vigorous discussion. The most popular answers have surprisingly similar characteristics, such as Iraqi Olympic teams with only four members. Ni Xia Lian, the 58-year-old table tennis player from Luxembourg.
Oksana Chusovitina, the only gymnast in the world to have participated in 8 consecutive Olympic Games, among others. All the stories and messages highlighting the Olympic spirit. This content, with a sense of fulfillment, resonated strongly with users and received over 10,000 cumulative interactions in just a few days. So far, Zhihu users have contributed more than 200,000 pieces of Olympic-related content to our platform. Bolstered by this mass of content with a sense of fulfillment, Zhihu garnered media praise as the most sophisticated platform for Olympic-related content that educates, edifies, and inspires users. Upgrading the content on our platform also helped further cement the trust among users in our community.
We have made corresponding revisions on the product side accordingly by optimizing our distribution and ranking algorithm to enable content with a sense of fulfillment to be more easily recommended and consumed by users. In addition to encouraging production of premium content with a sense of fulfillment through products, technology, and operations, we have also pursued community compliance through proactive community governance and the scrutinizing of non-compliant content. In the second quarter, we conducted a targeted community governance campaign to ensure the long-term health and prosperity of our community. Why are we paying so much attention to and emphasizing premium content meeting the sense-of-fulfillment standard? Ultimately, premium content defined by a strong sense-of-fulfillment standard is what forms the unique DNA of Zhihu's content offering and differentiates us from other platforms.
As we continue to improve our technology, operational efficiency, and upgrade the standard details on our platform, content with a sense of fulfillment will inspire deeper and longer-term trust among users. This will be a key differentiator for our platform in the market, strengthening our competitive advantage. Moving to the users. Driven by premium content with a sense of fulfillment, our monthly active users continued to grow rapidly in the second quarter, with average MAUs reaching 94.3 million, representing year-on-year growth of 46.2%. We are excited to see that the percent of Zhihu active users between 18 and 25 years old increased to 40% from 20% in the past two years, representing an increase over four times in absolute terms. Users under the age of 25 accounted for a significant proportion of our new users in the second quarter.
As a group, their favorite content verticals are education, lifestyle, and consumer, as well as science, one of the Zhihu cornerstone content verticals. This clearly demonstrates that Zhihu has become a platform that attracts younger demographics and accompanies them through their life. Geographically, we were pleased to see the percentage of our users in Tier 2 cities and below increase by 4% quarter-over-quarter to over 51% at the end of second quarter, which demonstrates encouraging progress in lower-tier city penetration. The rapid growth of Zhihu's users in the second quarter was driven by continuous output of premium content, increased content consumption, and our investment in branding during the quarter. For example, during the May 4th Youth Day and Gaokao period, we launched a number of high-production-value promotional videos.
These videos imparted a sense of fulfillment that resonated strongly with a wide range of ages and attracted additional users to our platform. For this year's Youth Day, we launched a short film jointly with the Communist Youth League. It received more than 100 million views in just three days. It generated cross-generational discussions, and it resonated deeply with a wide range of people, from students to workers, and from 20-year-olds to 80-year-olds. Within our rapidly growing user base, there is a special group of users. That is our creative and active content creator pool. They are the driving force behind Zhihu. As of the end of June, there were over 49.5 million cumulative content creators on the Zhihu platform who contributed more than 420 million pieces of content in various formats.
Many video content creators who are active in the fields such as science, career, lifestyle, have already made Zhihu their primary platform for video content creation and distribution. On Zhihu, you can see an elderly tailor with over 40 years industry experience shares his unique and sophisticated insights on fashion through video. You can also hear Xiaolin Shuo, a Wall Street elite, address our users' curiosity and demand for financial knowledge through fun and dedicated videos. You may also be impressed by Shugui, the author of "Fitness Notes," and an excellent creator who previously expressed himself through graphics and text, and has now started to share his secrets to health and beauty through creative videos. In the second quarter, we further iterated our video tools, enabling creators to easily arrange video content into segments and match those segments with related topics and questions on the platform.
These video-like answers can greatly increase the interaction efficiency between users and video content creators, inspiring further creation. Our varied and multi-format content with a sense of fulfillment is created, filtered, and surges through user interactions on our platform. This content has become not only a cornerstone of the Zhihu content ecosystem, attracting more content creators, but also the key driver in further enhancing the vitality of the whole Zhihu platform. Moving into commercialization. The underlying driver for the commercialization of the content communities is content itself. Premium content with a sense of fulfillment not only encourage engagement among users, but also improves user experience, as well as brings about more possibilities for commercialization. In the second quarter, Zhihu further optimized its revenue structure as the proportion of total revenue contributed by the content commerce solutions and paid membership continued to increase.
This demonstrates our practice of good content makes for good business is on track. Content with a sense of fulfillment not only addresses users' consumption needs for high quality content, but also meets the commercialization demands of our business partners. In the second quarter, content commerce solutions revenue reached RMB 207.4 million, accounting for 32% of the total revenue, and representing a 15x year-over-year increase. Paid membership revenue for the quarter was RMB 154.9 million, contributing approximately 24% of the total revenue, and representing a 124% year-over-year increase from the second quarter of 2020. As a percentage of total revenue, advertising revenue decreased to 39% in the quarter, despite increasing 48% year-over-year from the second quarter of 2020. Before our CFO shares more color on our financial performance, I would like to highlight our efforts to strengthen our monetization capability in the second quarter.
We increased investment in our content-centric commercial ecosystem by launching the Cheese Platform, in Chinese[Non-English content] , a commercial service platform for content creators. By connecting creators and business partners, this platform helps content creators to improve their monetization capabilities, as well as meeting the various monetization needs of business partners, from the brand building to sales conversion. For example, one of the content creators on the Cheese Platform, Li Lei, a doctor of biology and science researcher from the Chinese Academy of Sciences, accepted an invitation from L'Oréal to address the question, how to grow thicker hair? An issue that bothers many young people. Mr. Li started with the ingredients of hair care products and provided a detailed explanation and step-by-step guidance.
This was all presented with easy-to-read text and images, and in plain but specific language, that not only effectively relieved the anxiety of users, but also provided a convincing recommendation for L'Oréal anti-hair loss products. This is a great illustration of how good commercial content can not only become content with a sense of fulfillment, but can also drive business growth for brands and merchants. Every month, we publish a ranking list of Zhihu creators in terms of commercial value, with the aim of recommending our content-creating talent with the most commercial value in various verticals. In our latest top ranking list, creators with the ability to create in both picture and text, as well as video, accounted for more than 50%, demonstrating the growth trend of Zhihu's video commercial content.
We believe investment in products and services for our content creation system will lay a solid foundation for the development of content commercialization on our platform at scale. With respect to brands and merchants, we have noticed that in the context of upgraded consumption, we are seeing an increasing number of emerging brands. As a community that brings together the most creative users and content creators that fuse up technology, business, fashion, film, and culture, Zhihu has become an important platform for the younger demographic's lifestyle and consumer purchase decision-making. Recently, in collaboration with new emerging brands, we jointly launched the growth plan for emerging brands, otherwise known as the Zhihu Boom Program.
Through this program, we work closely with selected brands to grow together and to increase direct interactions between these emerging brands and users on Zhihu platform through co-creation of community content, special events, and joint marketing of promotional events. By doing so, we encourage user feedback and enable users to see improvements in products and services. At the same time, we provide a chance for merchants and brands to join our quality content community to gain users' recognition and trust, and help them to achieve healthy and long-term development. As of the end of July, selected emerging brands covering industries including beauty and personal care, digital technology, and fast food have joined the program. During this year's 618 Festival, Zhihu become a grassroots community for our young generation users. Thousands of questions- and- answers helpful to consumer decision-making constitute a unique Zhihu market.
Among a large number of Q&As, consumption-related content in the format of professional evaluation, real user experience, smart shopping recommendations, as well as guidance, have formed a unique shopping model for Zhihu, and have become an important search target for many consumers before they shop. In the second quarter of 2021, high-quality content consumption on Zhihu's platform promoted the rapid growth in our e-commerce business, resulting in e-commerce GMV exceeding RMB 2 billion in the quarter, up 115% year-over-year.
This demonstrates the consumption power of Zhihu users. In addition to the above, we also achieved rapid growth in paying membership and the monetization process of other business lines, which will be discussed in more detail by our CFO. In conclusion, in the second quarter of 2021, Zhihu maintained its strong new growth momentum from the first quarter. We successfully surpassed our target for user scale, content coverage expansion, and monetization progress.
We owe such success to Zhihu's persistence in following our founding belief of the company. Let me end today's prepared remarks with an excerpt from a speech of mine from 2019. China's internet industry has entered its adulthood. When the battle for traffic turned to the battle for quality, premium content and health ecosystem become more than a passing phrase, but rather the core and the key element for the sustainable growth of a company. Let's jointly create a civilized and thriving ecosystem through healthy competition, enabling the internet to become a powerful driver to accelerate the growth of the whole nation. We firmly believe that those who stay true to their founding beliefs will go the furthest. This concludes the remarks of Mr. Zhou Yuan, our founder and CEO. I will now start with our financial performance review for the second quarter of 2021.
As previously mentioned, we delivered an outstanding set of financial results for the second quarter of 2021. We recorded total revenue of RMB 638.4 million, representing a 144.2% increase year-over-year. As our content commerce solutions and paid membership together contributed over 50% to our total revenue. In the second quarter of 2021, our Zhi+ business contributed RMB 207.4 million in revenue, making Zhi+ our second-largest business segment by revenue contribution in the quarter, representing an increase of 15x over the same period of 2020. The strong growth momentum of Zhi+ reflects the market recognition of its high marketing efficiency among merchants and brands. The number of customers for the business line has increased tenfold since the first quarter of 2020.
In addition, our growing business partners and brand portfolio for the business line also represents much broader coverage, including fast-moving consumer goods, vocational education, beauty and personal care, as well as pan-life services. As we refined and introduced the sense of fulfillment as the new evaluation standard for content in the second quarter, we see great growth potential for Zhi+, as we believe it will continue to unleash the great commercial potential of our platform going forward. Advertising revenue achieved RMB 248.3 million for the second quarter of 2021, representing an increase of 38.4% over the same period of 2020. The key driver of this rapid growth is the increase of advertising spending of our business partners, as many sectors are showing strong post-pandemic recovery. FMCG, e-commerce, and automotive are among the strongest in terms of advertising growth on Zhihu.
Our paid membership revenue for the quarter was RMB 154.9 million, growing 123.5% year-over-year, with the average monthly paying members doubling compared with the same period of last year, reaching RMB 4.7 million. Our paying ratio continued to grow in the second quarter of 2021 to 5%, while the average monthly revenue per paid membership users remained stable. We are proud to have witnessed many young talents grow with our paid membership service, and we will continue our investment into this service to benefit all participants in our ecosystem. Other revenues, including new initiatives, primarily contributed by e-commerce and vocational education, also performed strongly in the second quarter of 2021, with total revenues increasing by 131% year-over-year to RMB 27.8 million.
In this year's 618 event, a large number of consumption-related content formed a unique shopping model for Zhihu, and drove the rapid growth of the e-commerce business with the GMV for the quarter exceeding RMB 2 billion, up by 115% year-over-year. Our education income, which constitutes occupational and post-graduate examination preparation courses only, also made significant progress. We have seen a slightly higher proportion of our occupational courses, among which our occupational skill improvement courses such as writing skills training are overwhelming, and we expect more diversified verticals and courses such as post-graduate examination related and CFA and CPA preparation will contribute more in the coming quarter. On the cost and expense side. Our rapidly growing business drove a year-over-year increase of 94% in total cost of revenue to RMB 261.8 million for the second quarter.
The higher year-over-year increase was primarily due to the increases in our advertising services, execution, and content-related costs, as well as our cloud services and bandwidth costs with rapid user traffic growth. While the total cost of revenues increased, our margin profile remained strong. Gross margin for the second quarter of 2021 was 59%, compared to 48.4% for the same period of last year. Our total operating expenses increased to RMB 727.1 million in the second quarter, driven primarily by investments in marketing, promotional expenses, and human resource expenses for new headcounts. Our marketing and promotional campaign in the run-up to China's college entrance exam, the Gaokao, help us to effectively acquire new users and greatly enhance our brand recognition, which we expect to benefit us both in the short- term and long- term.
Our operating margin in the second quarter of 2021 narrowed from negative 60.3% to negative 54.9% on a year-over-year basis, demonstrating our progressively stronger operating efficiency. Our adjusted net loss, which is a non-GAAP measure that includes share-based compensation expenses, was RMB 200.3 million for the second quarter of 2021. As of March 31, 2021, the company had cash and cash equivalents, term deposits, restricted cash, and short-term investments of RMB 7,703.1 million. Finally, onto our financial outlook. Looking to the third quarter of 2021, the company expects total revenue to be in the range of RMB 850 million-RMB 820 million, reflecting a year-over-year increase of 112.9%-114.2%. As a reminder, this outlook reflects Zhihu's current and preliminary estimates and is subject to change. This concludes our earning remarks. Operator, we are ready for the Q&A.
Thank you. We will now begin the question and answer session. To ask a question you may press star then one on your touchtone phone. If you are using a speaker phone please pick up your hands and keep pressing the keys. To withdraw please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Piyush Mubayi from Goldman Sachs. Please go ahead.
Thank you for taking my question. My first question is about your MAU, which has grown very nicely. Could you just take us through the dynamics of what has led that to happen? How close are you to the magic number of 100 million? As you look at your third quarter guidance, could you give us a sense of where that MAU number will be that's going to drive the revenue guidance that you've provided for third quarter? The second question concerns the mix in revenue between content commerce solution and advertising. How have you managed to grow your content commerce solution so nicely in the quarter? If you could just take us through the dynamics that have led to that. I just wondered, on the performance advertising side, there's been a slight weakness. What is the cause of that?
If you could just take us through those two questions, that would be great. Thank you. I have a follow-up question.
[Non-English content]
This is the CEO and founder of Zhihu, Mr. Zhou Yuan. As for the user growth, if you're familiar with our business, you may understand that a large proportion of our new users are actually attracted organically to our community by user-created content.
[Non-English content]
Naturally you understand that good content impose direct and genuine impact on our users and create attractiveness to these new users. In different scenarios, in different demands, these kind of attractiveness to users displayed seasonality and cycles, which is very prominent. I can explain in greater details now.
[Non-English content]
Let us take Gaokao examination as an example for this. Just two months ago, we had this Gaokao exam in China nationwide. During that period, over 35 million users have consumed Gaokao related content in our community. These 35 million users are 3x as that of those who actually sat in the Gaokao examination. We know that a lot of them are actually not only the high school graduates who take the examination, but also their parents, their teachers, and those who used to take this examination in the past.
[Non-English content]
This showcases a very obvious cycle of user activity or seasonality as we call it. We are very happy to see that there are a lot of young users and users from different generations who are very active during certain period and have a lot of interactions with one another
[Non-English content]
At certain time of the year, we will organize specific activities according to different user groups and their specific demands, not only during Gaokao period, but also in other periods of the year we will do so, and to create more users and attract them to our community.
[Non-English content]
Also in the past two months, you see that we have launched a campaign called Seeking Answers in Science, where we have attracted over 800,000 creators on our platform to produce public education materials in science. These materials have scanned over 2.4 billion page views in total. Another example is a short video film that we have created to celebrate the Youth Day, the May 4th, which is called The Reunion, and they are attracting users from various generations, including those who are born as early as in 1950s and those who are born as late as after 2000.
[Non-English content]
Thanks to our deep insights into our users, we have very nice outcome and nice efficiency in terms of user acquisition as a result of our campaigns and events. You see that, one thing that remains unchanged is that our content remained the main driver for us to attract users organically, and they are able to seek values in our community when they join us. Thank you.
[Non-English content]
We are also very happy to see that young users as a percentage to our total user base is on the rise. Our new users recruitment in new first-tier cities and second-tier cities are kept a very healthy trend and that will give us a steady user increase going forward in the future. Thank you. I'll have our CFO, Mr. Sun Wei to make additional comments please.
[Non-English content]
Our analyst ask about when will we hit the target of 100 million active users? Well, we are now doing 99 million, and that is very close to our big target of 100 million. I should say that our ultimate goal is to attract those users and make them stay and make them active in our community. I think with all sorts of efforts that we are making, we have the right confidence to say that we could hit the target of 100 million in Q4, and to make them stay active in our circle. Thank you.
[Non-English content]
As to the question of Zhi+ business, why we had such a stellar quarter is because that our user on this regard has increased by over 100% in the last quarter.
[Non-English content]
Because we have a 500% increase of the clienteles, our mechanism of Zhi+ became much more effective and the outcome looks quite positive. As you can see, the indicators such as CTR look very good, and also CPC under our bidding system increased as much as 20%.
[Non-English content]
Despite the fact that our Zhi+ business is growing very fast and healthily, we still think that Zhi+ has huge potentials to unleash going forward. Right now, we only have less than 50,000 pieces of content commerce solution content, compared with our total content library of 420 million pieces of our content, this is still a very small or tiny proportion.
[Non-English content]
[Non-English content]
If I'm not mistaken, I think there was a question about regulation. Would you maybe specifically ask what kind of areas do you want to know more about the regulation?
We just want to know the impact of the sectors that have seen a slowdown on account of regulation. What is your exposure to those sectors?
[Non-English content]
[Non-English content]
Well, as for those specific areas that are heavy-handedly treated by the government recently, I think that in our client mix, the exposure or the percentage of the client in those areas are not very high, and therefore our business exposure to regulatory crackdown is controllable. We believe that for the long term, this is a positive sign for the Internet industry. We are part of it for the longer term, we are positive about that. Thank you.
Thank you very much.
The next question comes from Alex Xie from Credit Suisse. Please go ahead.
Hi, management. Thank you for taking my questions and congratulations on a very strong quarter. My first question is about your video initiatives. Would you please elaborate more about the optimization of the structure in your video? Do you have more data points to show the impact of your adjustments? When do you expect the optimization process to be completed? What about the outlook of video penetration in the second half? The second question is about your major content-driven user acquisition events in the second half. In the first half, we have seen a very successful impact from your 10th year anniversary as well as the Gaokao event. What will be the key events that we should look for in the second half? Thank you.
[Non-English content]
[Non-English content]
Yes, as we explained in the opening remarks that our video content creators have been increasing dramatically by 75% monthly video creators in the second quarter, and the daily upload volume increased by 3x .
[Non-English content]
I think that behind those nice numbers is our emphasis on the ecosystem, because we think that video business is not just a standalone business. We believe that video content is part and parcel of our content library at Zhihu. In reality, I think the increase of video content and the active content creators of videos and consumers of videos are actually a reflection of the changes in our ecosystem in our community.
[Non-English content]
Our content creators and consumers are becoming active in consuming both the text and images as well as the videos. Maybe I can show you some numbers. For instance, in the area of engineering, technology, economics, and laws, the consumption of text and image increased by 136%, 112% and 58% respectively, and the interaction increased by 102%, 111% and 134% respectively.
[Non-English content]
As for video consumptions, it has been also very active and the top areas are health as well as humanities and digital devices. The actual numbers of the video consumptions and interactions, to save time, I won't elaborate right now, and I can share the details of those numbers with you later on after this call.
[Non-English content]
As the new school year is about to start pretty soon, and we will continue to encourage content creation and interaction encouragement in the form of video with the help of our newest benchmark on the sense of fulfillment. We will focus on certain areas such as humanities, economics, career development, and etc.
[Non-English content]
The next question comes from Yanyan Xiao from CICC. Please go ahead.
[Non-English content] question is about the guidance on the second half operating expenses, especially for the sales and marketing.
Could you give us more color about the specific investment directions for the sales and marketing expenses? Thank you.
[Non-English content]
As for operating costs, in Q2, we had operating costs totaling at RMB 727 million, and sales and marketing RMB putting together are contributing to 80% of that expenses. Well, as for sales and marketing specifically, I should first of all point out that our MAU increased by 46% year-over-year, standing at 94 million users, which is actually beyond our target set for this quarter.
[Non-English content]
The cost we spend on each new MAU is less than RMB 48, which is sitting at the lower end of the spectrum of the internet industry. This proves that our sales and marketing activities are quite successful, and we're seeing very good ROI out of our sales and marketing expenses. We will keep an eye on our CAC and our retention rate, and we'll continue to spend our sales and marketing money to acquire more MAUs and grow that number. Thank you.
[Non-English content]
R&D is another key element to our operating expenses as we keep recruiting great talents, especially R&D talents, to support our business growth in Q2. The R&D expense increases 40% year-over-year, whereas the revenue increases 144%, which is by far higher than the rate of the R&D expenses growth. That is a proof that we have been quite efficient in terms of R&D expenses.
[Non-English content]
Entering into the second half of the year, we will keep spending on getting more users and getting better talents to join our business. We will make sure that the expenses are reasonable, necessary, and effectively used. To have a stringent monitoring system on by rolling accounting methods to make sure that we spend the money wisely.
[Non-English content]
Thank you. That's the end of my answer for OPEX. Thank you.
The next question comes from Thomas Chong from 86Research. Please go ahead.
[Non-English content]
Good evening, management. Thank you for taking my questions. I have a follow-up question on the regulatory front. I'm wondering, have you seen more step up by the regulators on paying attention to the media content, the content within the ads of data security? Will this be a potential risk going forward, and what could be the impact on Zhihu from these aspects? My second question is a follow-up question on the user metrics for the second quarter. If you could share the sequential trend for the DAU and time spent, also any updates on the retention of the EM plus users, and how should we expect the trend of user engagement traffic metrics on Zhihu in the future? Thank you.
[Non-English content]
Well, Mr. Zhou Yuan will address the first question about the regulatory issues and data security. We believe that the government's policy with regard to content and data compliance is for the long-term health and safe development of our business and our industry at large.
[Non-English content]
As for data security, we have been investing a lot in terms of the technology and management approaches by upgrading our standards and better management of the data and et cetera, to safeguard the security of the data that we have. When it comes to content, well, we are also taking some measures to make sure that the content are of a high quality and are properly produced in our community, in Zhihu.
[Non-English content]
We have also conducted some industry survey to make sure that we are in a leading position in terms of the data security in our area. We are also in constant communications with the competent regulators to make sure that we will shoulder our responsibility fully and properly.
[Non-English content]
In terms of content, I should say that under some topics and discussions that are highly popular in our community, we can also see the voices from the central media to participate and make contributions as well. As the user of our communities will be able to understand some certain issues or current issues in a reasonable and comprehensive way.
[Non-English content]
As for user metrics, this is from CFO Sun Wei. For Q2, our users keeps growing very well, and the time spent on app remained very stable compared with the past consecutive 8-9 quarters. In terms of activity levels, you see that the ratio of DAU versus MAU remained at 25%, which is quite stable. Even we saw a slight increase in July. When it comes to paid membership in Q2, we are nudging towards 5 million paid members, and the renewal rate for either monthly subscription or six-month subscription, both remained very stable. They're looking very well.
Due to time constraints, that concludes today's question and answer session. At this time, I will turn the conference back to Jingjing for any additional or closing remarks.
Thank you all once again for joining us today. If you have any further questions, please contact our IR team directly or TPG Investor Relations. Thank you.
Thank you.
The conference is now concluded. Thank you for attending today's presentation.