Baidu Announces Second Quarter 2024 Results

BEIJING, Aug. 22, 2024 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU and HKEX: 9888 (HKD Counter) and 89888 (RMB Counter)), ("Baidu" or the "Company"), a leading AI company with strong Internet foundation, today announced its unaudited financial results for the second quarter ended June 30, 2024.

"AI Cloud continued to accelerate in the second quarter, offsetting the ongoing macro headwinds for online marketing revenue and resulting in modestly positive topline growth for Baidu Core. Operationally, we fast-tracked the renovation of Baidu search, which we believe will drive long-term success despite the short-term impact on monetization. We also achieved new breakthroughs with Apollo Go, which now offers 100% fully driverless ride-hailing services in practically the entire Wuhan municipality, and has started scalable testing of the latest RT6 vehicles," said Robin Li, Co-founder and CEO of Baidu. "Gradually, the transformative impact of Gen-AI and foundation models is becoming more tangible in business and everyday life. Throughout all layers of our AI technology stack and with the rapid adoption of applications built on top of ERNIE, we are scaling AI to address real-world problems and generate substantial value both for external customers and our own product portfolio."

"As we speeded up the AI-native transformation of our products in the second quarter, we continued to optimize our operations and maintained a healthy margin," said Rong Luo, CFO of Baidu. "For AI Cloud in particular, we expect growth to maintain a strong momentum."

Operational Highlights

Corporate

• Baidu expanded the ERNIE family of models with the launch of ERNIE 4.0 Turbo in June 2024, offering superior capabilities for typical use cases, and designed to run faster and at lower cost compared to ERNIE 4.0.
• Baidu returned US$301 million to shareholders since the beginning of Q2 2024, bringing the cumulative repurchase to about US$1.2 billion under the 2023 share repurchase program.
• Baidu earned a position in the China edition of the S&P Global Sustainability Yearbook, in recognition of its exceptional ESG performance. The selection stems from a comprehensive evaluation of 1,700 Chinese companies as part of the S&P Global 2023 Corporate Sustainability Assessment, underscoring Baidu's sustainability practices.

AI Cloud

• PaddlePaddle and ERNIE developer community grew to 14.7 million in June 2024.

Intelligent Driving

• Apollo Go, Baidu's autonomous ride-hailing service, provided about 899K rides in the second quarter of 2024, up 26% year over year. As of July 28, 2024, the cumulative rides provided to the public by Apollo Go surpassed 7 million.
• On June 19, Apollo Go started offering 100% fully driverless operations in practically the entire Wuhan municipality, its largest operational city, marking a significant milestone.
• The sixth-generation of our autonomous vehicle, the RT6, is now undergoing scalable testing.

Mobile Ecosystem

• In June 2024, Baidu App's MAUs reached 703 million, up 4% year over year.
• Managed Page accounted for 51% of Baidu Core's online marketing revenue in the second quarter of 2024.

Second Quarter 2024 Financial Results

Total revenues were RMB33.9 billion ($4.67 billion), which was basically flat from last year.

• Revenue from Baidu Core was RMB26.7 billion ($3.67 billion), increasing 1% year over year; online marketing revenue was RMB19.2 billion ($2.64 billion), decreasing 2% year over year, and non-online marketing revenue was RMB7.5 billion ($1.03 billion), up 10% year over year, mainly driven by AI Cloud business.
• Revenue from iQIYI was RMB7.4 billion ($1.02 billion), decreasing 5% year over year.

Cost of revenues was RMB16.4 billion ($2.26 billion), increasing 1% year over year, primarily due to an increase in traffic acquisition costs and costs related to AI Cloud business.

Selling, general and administrative expenses were RMB5.7 billion ($784 million), decreasing 9% year over year, primarily due to a decrease in expected credit losses, channel spending and promotional marketing expenses and personnel related expenses.

Research and development expenses were RMB5.9 billion ($810 million), decreasing 8% year over year, primarily due to a decrease in personnel related expenses.

Operating income was RMB5.9 billion ($818 million). Baidu Core operating income was RMB5.6 billion ($772 million), and Baidu Core operating margin was 21%. Non-GAAP operating income was RMB7.5 billion ($1.03 billion). Non-GAAP Baidu Core operating income was RMB7.0 billion ($964 million), and non-GAAP Baidu Core operating margin was 26%.

Total other income, net was RMB771 million ($106 million), decreasing 44% year over year, primarily due to a decrease in net foreign exchange gain and disposal gain, partially offset by the decrease in fair value loss and impairment loss from long-term investments.

Income tax expense was RMB1.1 billion ($156 million), compared to RMB1.3 billion in the same period last year.

Net income attributable to Baidu was RMB5.5 billion ($755 million), and diluted earnings per ADS was RMB15.01($2.07). Net income attributable to Baidu Core was RMB5.5 billion ($752 million), and net margin for Baidu Core was 20%. Non-GAAP net income attributable to Baidu was RMB7.4 billion ($1.02 billion). Non-GAAP diluted earnings per ADS was RMB21.02($2.89). Non-GAAP net income attributable to Baidu Core was RMB7.3 billion ($1.00 billion), and non-GAAP net margin for Baidu Core was 27%.

Adjusted EBITDA was RMB9.1 billion ($1.26 billion) and adjusted EBITDA margin was 27%. Adjusted EBITDA for Baidu Core was RMB8.6 billion ($1.19 billion) and adjusted EBITDA margin for Baidu Core was 32%.

As of June 30, 2024, cash, cash equivalents, restricted cash and short-term investments were RMB162.0 billion ($22.29 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB155.0 billion ($21.32 billion). Free cash flow was RMB6.3 billion ($862 million), and free cash flow excluding iQIYI was RMB5.9 billion ($810 million).

Conference Call Information

Baidu's management will hold an earnings conference call at 8.00 AM on Aug 22, 2024, U.S. Eastern Time (8.00 PM on Aug 22, 2024, Beijing Time).

Please register in advance of the conference call using the link provided below. It will automatically direct you to the registration page of "Baidu Inc. Q2 2024 Earnings Conference Call". Please follow the steps to enter your registration details, then click "Register". Upon registering, you will then be provided with the dial-in number, the passcode, and your unique access PIN. This information will also be emailed to you as a calendar invite.

For pre-registration, please click:
https://s1.c-conf.com/diamondpass/10040402-jgu7y6.html

In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), the passcode and unique access PIN) provided in the calendar invite that you have received following your pre-registration.

Additionally, a live and archived webcast of this conference call will be available at https://ir.baidu.com.

About Baidu

Founded in 2000, Baidu's mission is to make the complicated world simpler through technology. Baidu is a leading AI company with strong Internet foundation, trading on NASDAQ under "BIDU" and HKEX under "9888". One Baidu ADS represents eight Class A ordinary shares.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, Baidu's and other parties' strategic and operational plans, contain forward-looking statements. Baidu may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in announcements made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Baidu's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Baidu's growth strategies; its future business development, including development of new products and services; its ability to attract and retain users and customers; competition in the Chinese Internet search and newsfeed market; competition for online marketing customers; changes in the Company's revenues and certain cost or expense items as a percentage of its revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to intellectual property rights; the expected growth of the Chinese-language Internet search and newsfeed market and the number of Internet and broadband users in China; Chinese governmental policies relating to the Internet and Internet search providers, and general economic conditions in China and elsewhere. Further information regarding these and other risks is included in the Company's annual report on Form 20-F and other documents filed with the Securities and Exchange Commission, and announcements on the website of the Hong Kong Stock Exchange. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of the press release, and Baidu undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Financial Measures

To supplement Baidu's consolidated financial results presented in accordance with GAAP, Baidu uses the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributable to Baidu, non-GAAP net margin, non-GAAP diluted earnings per ADS, adjusted EBITDA, adjusted EBITDA margin and free cash flow. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Baidu believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain items that may not be indicative of its recurring core business operating results, such as operating performance excluding non-cash charges or non-operating in nature. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Baidu's historical performance and liquidity. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a significant component in the Company's results of operations. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data.

Non-GAAP operating income represents operating income excluding share-based compensation expenses, and amortization and impairment of intangible assets resulting from business combinations.

Non-GAAP net income attributable to Baidu represents net income attributable to Baidu excluding share-based compensation expenses, amortization and impairment of intangible assets resulting from business combinations, disposal gain, impairment of long-term investments, and fair value gain (loss) of long-term investments, adjusted for related income tax effects. Baidu's share of equity method investments for these non-GAAP reconciling items, amortization and impairment of intangible assets not on the investees' books, accretion of their redeemable non-controlling interests, and the gain or loss associated with the issuance of shares by the investees at a price higher or lower than the carrying value per share, adjusted for related income tax effects, are also excluded.

Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated by dividing non-GAAP net income attributable to Baidu, by the weighted average number of ordinary shares expressed in ADS. Adjusted EBITDA represents operating income excluding depreciation, amortization and impairment of intangible assets resulting from business combinations, and share-based compensation expenses.

For more information on non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measure."