Executive Summary / Key Takeaways

• 36Kr Holdings has engineered a dramatic operational turnaround, narrowing its net loss by 95% in H1 2025 while expanding gross margins by approximately 9.4 percentage points to 54.4%, demonstrating that AI-driven cost optimization and content ecosystem strengthening are creating genuine operating leverage.

• The company's strategic pivot from broad-based advertising to AI-enhanced, high-margin enterprise services is gaining traction, with internet client revenue surging 52% year-over-year and global expansion initiatives attracting over 200 industry projects, positioning KRKR at the intersection of China's tech innovation and outbound corporate growth.

• Management's explicit guidance for profitability by end-2025 is credible, supported by a 52% reduction in operating expenses, strategic workforce optimization, and the launch of proprietary AI products like "36Kr corporate Omni intelligence" serving 7,800+ public companies, which address previous manpower limitations and unlock new revenue streams.

• The investment thesis hinges on two critical variables: execution of AI product commercialization at scale amid macroeconomic headwinds, and successful monetization of global expansion services where KRKR faces competition from larger platforms like Sohu and Zhihu that command greater user scale but lack KRKR's specialized B2B depth.

• While KRKR's $4.40 stock price and $8.7 million market cap reflect its micro-cap status and ongoing losses, its H1 2025 gross margin of 54.4% and clear path to profitability differentiate it from direct competitors, though the company remains vulnerable to advertising cyclicality and customer concentration risks that larger peers can better absorb.

Setting the Scene: The AI Content Revolution's Niche Architect

36Kr Holdings Inc., founded in 2010 and headquartered in Beijing, occupies a specialized corner of China's digital media landscape. Unlike broad-based portals such as Sohu.com (SOHU) that chase mass market traffic, KRKR built its foundation serving participants in China's "New Economy"—technology startups, venture capitalists, and innovation-driven enterprises. The company generates revenue through three distinct segments: online advertising services (80% of H1 2025 revenue), enterprise value-added services (13%), and subscription services (7%). This structure positions KRKR as a hybrid content creator, business intelligence provider, and corporate event organizer, with its 36Kr Research Institute producing industry reports that command premium pricing from institutional clients.

The industry structure reveals why KRKR's positioning matters. China's digital advertising market, while massive, faces macroeconomic pressures that have forced advertisers to adjust spending strategies, directly impacting revenue across the sector. Simultaneously, the rise of AI-generated content (AIGC) and large language models is reshaping content production economics, threatening commoditization while offering efficiency gains. KRKR's response has been to double down on specialization rather than scale. The company's content ecosystem—spanning flagship channels 36Kr and 36Kr Pro, vertical accounts like "36Kr auto" and "emergence of intelligence," and international footprints in Japan and Southeast Asia—creates a network effect where each piece of content reinforces its authority in tech and innovation coverage. This differentiation is crucial: while Sohu leverages a 100-million-plus user base for mass advertising and Zhihu (ZH) relies on community-generated Q&A content, KRKR's curated, professional analysis commands higher engagement from decision-makers, with 339 articles achieving over 100,000 page views in H1 2025 alone.

The company's history explains its current strategic inflection. After achieving 11 consecutive quarters of follower growth through 2023, KRKR recognized that breadth alone wouldn't drive profitability. The 2023 pivot toward AI integration—launching an AI-driven Taobao store, partnering with Baidu's (BIDU) ChatGPT ecosystem, and embedding AIGC across production—marked a deliberate shift from traffic acquisition to operational efficiency. This evolution accelerated in 2024 with a "three-step strategy" focusing on positioning, expansion, and collaboration, which management credits for the 50% operating expense reduction in H2 2024. By H1 2025, KRKR had reached 36.57 million followers across 17 consecutive quarters of growth, but more importantly, it had transformed its cost structure, with operating expenses down 52% year-over-year and gross profit up 10% despite a 9% revenue decline.

Technology, Products, and Strategic Differentiation: The AI Moat

KRKR's core technological advantage lies not in building foundational AI models, but in applying AIGC to solve the content industry's fundamental constraint: manpower bandwidth. The company has systematically integrated AI across its entire production chain, from information identification and text processing to image generation and video editing. This matters because it directly addresses the scalability problem that has historically limited professional media companies. In H1 2025, KRKR's AI meeting coverage product had already covered 993 companies, automating the creation of content that previously required extensive journalist hours. The "36Kr corporate Omni intelligence" platform, launched in October 2024, provides AI-powered daily sentiment analysis for over 7,800 public companies listed in Mainland China and Hong Kong, serving 4,220 subscribers and demonstrating that KRKR can productize its data assets into recurring SaaS revenue.

The strategic significance of these AI applications extends beyond cost savings. By launching specialized programs like "AI Car" and "AI Map" in early 2024, and integrating DeepSeek into its AI meeting product in March 2025, KRKR is creating proprietary data layers that competitors cannot easily replicate. While Sohu and Phoenix New Media focus on broad news distribution and Zhihu relies on user-generated content, KRKR's AI-enhanced research and analysis creates a feedback loop: more data improves AI accuracy, which enhances content quality, attracting more enterprise clients who provide additional data. This network effect is evident in the 52% year-over-year growth in internet client revenue, driven by AI and large language model segments that view KRKR's platform as essential for reaching tech-savvy audiences.

Management's R&D strategy centers on maximizing AIGC utilization while streamlining technical teams. Research and development expenses decreased 27% in H1 2025 to CNY 6.4 million, not from reduced innovation but from workforce restructuring that enhanced efficiency. The company is exploring advanced applications through partnerships, such as its strategic collaboration with SenseTime (STG) to jointly launch AI-driven offerings including financial report interpretation and one-click image generation. This approach allows KRKR to leverage external AI capabilities while focusing internal resources on domain-specific applications. The planned launch of a user review and discovery platform for AI tools in H2 2025 represents a potential new revenue stream that could position KRKR as the authoritative guide for enterprise AI adoption, a role no direct competitor currently occupies.

The economic impact is measurable and growing. AI-powered solutions have enabled KRKR to connect with enterprises previously beyond reach due to resource-intensive workloads, turning them into clients. The Doubao AI agent, launched as Douyin's exclusive technology and finance media partner, achieved consistent 10% weekly increases in user interactions, demonstrating that AI products can drive engagement metrics that directly support advertising revenue. This technological differentiation supports higher pricing power: the average revenue per online advertising customer reached RMB 489,000 in 2023, up 17% year-over-year, while ARPU for institutional subscription customers surged to over RMB 140,000.

Financial Performance & Segment Dynamics: The Leverage Play

KRKR's H1 2025 financial results provide compelling evidence that its strategy is working, despite top-line headwinds. Total revenue of CNY 93.2 million represented a 9% year-over-year decline, yet gross profit increased 10% to CNY 50.7 million, expanding gross margin from approximately 45.0% to 54.4%. This margin expansion, driven by strategic adjustments to customer and business mix coupled with strict cost controls, demonstrates that KRKR is successfully trading low-quality revenue for profitability. The mechanism is clear: the company proactively optimized its advertising products and customer base, eliminating underperforming and high-risk clients, which reduced revenue scope but improved overall profitability.

Segment-level performance reveals the strategic reallocation underway. Online advertising services revenue declined 7% to CNY 74.5 million in H1 2025, but this masks a crucial shift: revenue directly generated by internet clients, particularly in AI and large language model segments, surged 52% year-over-year. This growth is complemented by a 27% increase in FMCG segment revenue and a 30% rise from subvertical media channels targeting younger audiences, where brand client spending doubled. The introduction of a low ARPU product line for live streaming, complementing high ARPU premium content, expands appeal to early-stage startups that represent future high-value customers. While Sohu's advertising business faces similar macro pressures, KRKR's ability to grow revenue in tech-focused client segments demonstrates superior positioning in the innovation economy.

Enterprise value-added services revenue decreased 9% to CNY 12.2 million in H1 2025, but this decline reflects a deliberate strategic focus on margin improvement. Management has proactively refined service offerings, reducing regional office activities and scaling down low-margin government projects. This optimization is painful in the short term but strengthens long-term sustainability. The segment's strategic importance is underscored by its global expansion focus: KRKR hosted 11 global expansion events in H1 2025 and partnered with Hangzhou Tiantang New Era Construction and Investment Group to operate the Chinese Enterprise International Service Center. This initiative attracted over 200 upstream and downstream industry projects and government entities, positioning KRKR as a facilitator of China's corporate outbound expansion—a role that larger, domestically-focused competitors like Sohu and Zhihu have not prioritized.

Subscription services revenue fell 26% to CNY 6.4 million due to a planned business model transition, but ARPU among institutional customers increased 8% in H1 2024, indicating that the remaining customer base values KRKR's offerings more highly. The 36Kr Business School's development of international degree-based programs with institutions like Oxford University, and partnerships with Peking University and Tsinghua University for global intelligent entrepreneurship initiatives, creates high-margin revenue streams that are less susceptible to advertising cyclicality. This diversification is critical for financial stability, particularly when compared to Phoenix New Media's (FENG) heavier reliance on video advertising or Zhihu's dependence on community-driven premium memberships.

The balance sheet provides a stable but not abundant foundation. As of June 30, 2025, KRKR held CNY 75.1 million in cash, cash equivalents, and short-term investments, down from CNY 92.5 million at year-end 2024 but sufficient to support operations given the dramatic reduction in cash burn. The company has no debt, with a debt-to-equity ratio of 0.23, providing financial flexibility. However, the cash position is modest relative to larger peers: Sohu's net cash exceeds $500 million, while Zhihu holds over $300 million. KRKR's ability to maintain stable cash reserves while narrowing net losses by CNY 90 million demonstrates improving operational efficiency, but sustained profitability will be necessary to avoid future liquidity constraints.

Outlook, Management Guidance, and Execution Risk

Management's guidance is unambiguously optimistic, with Chairman and CEO Dagang Feng predicting profitability by end-2025. This forecast is grounded in tangible operational improvements: the 52% reduction in operating expenses, the rebound in gross margin above 50%, and the successful implementation of cost-cutting initiatives including office relocation, workforce optimization, and the elimination of unprofitable businesses. The company's "three-step strategy"—positioning, expansion, and collaboration—provides a clear framework for sustaining these gains while driving diversified development.

The advertising outlook reflects cautious optimism despite macroeconomic headwinds. Management plans to deepen expertise in key content verticals, particularly AI and global expansion, while continuing to optimize product and client structure. This strategy proved effective in H1 2024, when ARPU rose 22% year-over-year through deeper support for core customers including internet giants and Fortune 500 companies. The risk is execution: if macro pressures intensify, even KRKR's specialized positioning may not prevent further revenue declines. Sohu's larger scale provides a buffer in such environments, while KRKR's niche focus could become a liability if tech sector spending contracts sharply.

Global expansion represents the most significant growth opportunity. Management plans to continue hosting legacy IP events including the AI Partner Summit and Wise Business Conference, while establishing media operations targeting Europe and collaborating with the China Council for the Promotion of International Trade Beijing Subcouncil. The partnership with Hangzhou Tiantang New Era Construction and Investment Group is particularly strategic, aiming to build a unique service ecosystem for corporate global expansion that amplifies Tiantang's international influence while creating a powerful brand for KRKR. The execution risk lies in scaling these initiatives profitably: enterprise value-added services revenue has declined due to the strategic focus on margins, and the segment's recovery depends on converting event attendance and project pipelines into sustained revenue.

AI product development is the critical swing factor. Management plans to launch the "future human laboratory" graphic account to document real-world AI interactions and roll out a user review and discovery platform for AI tools in H2 2025. These initiatives could create new revenue streams and strengthen KRKR's position as an AI authority. However, the company faces competition from better-funded platforms: Zhihu's AI-enhanced recommendations benefit from larger user scale, while Sohu's integrated ecosystem can deploy AI features across gaming and media. KRKR's advantage lies in its specialized focus and proprietary data, but execution speed will determine whether this translates to sustainable market share gains.

Risks and Asymmetries: What Could Break the Thesis

The most material risk is macroeconomic deterioration accelerating advertiser pullbacks. Management explicitly attributes advertising revenue declines to advertisers adjusting strategies in response to macro pressures. While KRKR's optimization of customer structure to control credit risk is prudent, it also reduces revenue scope. If China's economic slowdown deepens, even the company's tech-focused client base may cut spending, threatening the path to profitability. This risk is more acute for KRKR than for diversified peers: Sohu's gaming revenue provides a cushion, while Zhihu's community model is less dependent on corporate ad budgets.

Customer concentration in enterprise value-added services presents a second key risk. Small and medium enterprises and government institutions constitute the majority of this segment's client base, and they are disproportionately affected by macroeconomic uncertainties. Government budget cuts and reduced consulting spending contributed to the segment's revenue decline. While KRKR's strategic restructuring of regional outlets and optimization of service architecture for government and public services has improved margins, it has also increased dependence on a smaller number of higher-value clients. The loss of a major government contract or a key enterprise client could materially impact results, a vulnerability that larger platforms with more diversified customer bases can better absorb.

Technology gaps relative to larger competitors represent a third vulnerability. KRKR's text-heavy, analytical content model excels in depth but lags in the video and interactive engagement tools that drive user growth on platforms like Douyin and Kuaishou (1024.HK). While KRKR has expanded video followers to 9.52 million and grown retail channel followers by 69% year-over-year, this remains modest compared to Zhihu's 100-million-plus active users or Sohu's integrated video-gaming ecosystem. If short-form video and AI-driven personalization become the dominant content consumption modes, KRKR may need to increase R&D investment significantly to compete, potentially compressing margins just as profitability comes into view.

Regulatory risk in China's media and technology sector is a persistent concern. The company's close work with government entities on global expansion initiatives and its coverage of sensitive tech sectors could expose it to policy shifts. Unlike larger, more diversified players that can absorb regulatory shocks, KRKR's specialized focus makes it more vulnerable to sector-specific crackdowns.

The primary upside asymmetry lies in accelerated AI adoption. If KRKR's AI meeting coverage, corporate Omni intelligence, and planned AI tools review platform gain traction faster than expected, the company could unlock new revenue streams with minimal incremental cost, given the fixed-cost nature of AI infrastructure. The 52% growth in internet client revenue suggests this momentum is building. Additionally, if China's corporate global expansion accelerates beyond expectations, KRKR's first-mover position in facilitating this trend could generate substantial enterprise value-added services revenue, turning the current margin-focused strategy into a high-growth business.

Valuation Context: Micro-Cap with Macro Ambitions

Trading at $4.40 per share, 36Kr Holdings carries a market capitalization of $8.67 million and an enterprise value of $1.70 million, reflecting its micro-cap status and the market's skepticism about its ability to achieve sustained profitability. The company's H1 2025 gross margin of 54.4% is competitive within the digital media space, trailing Sohu's 76.88% (boosted by high-margin gaming revenue) but exceeding Phoenix New Media's 45.63%. However, KRKR's -5.54% operating margin and -21.30% profit margin highlight the scale disadvantage relative to larger peers, all of which maintain more diversified revenue streams to absorb market volatility.

Given the current unprofitability, traditional earnings multiples are meaningless. More relevant metrics include the price-to-sales ratio of approximately 0.26x (based on TTM revenue of ~$32.7 million) and the company's cash position relative to burn rate. With $75.1 million in cash and a quarterly net loss that has narrowed to $2.66 million, KRKR has approximately seven years of runway at current burn rates—a comfortable buffer that provides strategic flexibility. This compares favorably to Zhihu's cash-to-burn ratio, though Sohu's positive free cash flow generation represents a superior financial position.

Enterprise value multiples reveal the market's valuation of KRKR's core operations net of cash. The EV/Revenue multiple of approximately 0.05x suggests investors attribute minimal value to the operating business, likely reflecting concerns about revenue sustainability and competitive positioning. This contrasts with Zhihu's EV/Revenue of ~0.72x, which reflects its larger scale and community-driven defensibility, and Sohu's negative enterprise value (due to net cash exceeding market cap), which signals a deeply undervalued asset base.

The path to profitability is the critical valuation catalyst. If KRKR achieves management's target of profitability by end-2025, the stock would likely rerate toward peer multiples. For context, if KRKR traded at 1.0x revenue—a modest multiple for a growing, specialized company—the stock would imply significant upside from current levels. However, this assumes successful execution of the AI and global expansion strategies without material macro deterioration.

Conclusion: The AI Content Inflection Point

36Kr Holdings stands at a critical juncture where strategic cost discipline, AI-driven operational transformation, and targeted market expansion are converging to create a credible path to profitability. The company's 95% net loss improvement in H1 2025, coupled with a 9.4-percentage-point gross margin expansion, demonstrates that management's "three-step strategy" is more than rhetoric—it is delivering measurable financial results. The strategic shift from low-margin, high-risk advertising clients to AI-empowered enterprise services and global expansion facilitation positions KRKR in higher-value market segments that larger, more generalized competitors have overlooked.

The investment thesis ultimately depends on two variables: the company's ability to commercialize its AI product suite at scale while maintaining the 52% expense reduction, and its success in converting global expansion event pipelines into sustained enterprise revenue. If KRKR can execute on these fronts, its specialized positioning in China's tech ecosystem and first-mover status in outbound corporate services could support a sustainable competitive moat. However, the company remains vulnerable to macroeconomic pressures that could derail advertising recovery and to execution missteps in scaling AI products against better-funded rivals.

For investors, the $4.40 stock price reflects a market that has yet to price in the operational transformation. The micro-cap valuation provides significant upside potential if management delivers on its end-2025 profitability promise, but it also underscores the real risk of permanent capital impairment if the AI content strategy fails to achieve commercial escape velocity. Monitoring quarterly progress on AI product adoption rates and enterprise value-added services revenue will be critical to validating whether KRKR is building a durable, profitable business or merely cutting costs toward a smaller, less relevant future.