Baidu, Inc. (BIDU) today announced its unaudited financial results for the third quarter ended September 30, 2022.
"Baidu Core delivered a solid set of financial and operational results in the third quarter, despite the continued challenges posed by the COVID-19 resurgence. Baidu Core's revenue resumed positive growth, driven by a gradual recovery of our online marketing business and the steady growth of our AI Cloud revenue. Notably, we continued to make significant progress in intelligent driving. On the one hand, Baidu Apollo's auto solutions continued gaining popularity amongst leading automakers. On the other hand, Apollo Go continued scaling up its operation, completing more than 474,000 rides in the quarter, further strengthening its leading position in the global autonomous ride-hailing market," said Robin Li, Co-founder and CEO of Baidu. "Looking ahead, we expect our mobile ecosystem to continue generating strong cash flow and fund our investment in AI Cloud and intelligent driving, which will help maintain our leadership in the new AI business and drive long term business growth."
"In the third quarter of 2022, Baidu Core's non-GAAP operating profit increased by 14% year over year to RMB6.7 billion despite that the resurgence of COVID-19 pressured revenue performance. This achievement is attributable to our relentless efforts in cost optimization and operational efficiency." said Rong Luo, CFO of Baidu. "Going forward, we will continue to focus on quality revenue growth. At the same time, we will keep investing in technology and talents to propel our future development."
Third Quarter 2022 Financial Highlights[1]
Baidu, Inc. | ||||||||||
(In millions except per | Q3 | Q2 | Q3 | |||||||
ADS, unaudited) | 2021 | 2022 | 2022 | YOY | QOQ | |||||
RMB | RMB | RMB | US$ | |||||||
Total revenues | 31,921 | 29,647 | 32,540 | 4,574 | 2 % | 10 % | ||||
Operating income | 2,308 | 3,400 | 5,317 | 747 | 130 % | 56 % | ||||
Operating income (non-GAAP) [2] | 4,708 | 5,493 | 7,200 | 1,012 | 53 % | 31 % | ||||
Net (loss) income to Baidu | (16,559) | 3,637 | (146) | (21) | (99 %) | - | ||||
Net income to Baidu (non-GAAP) [2] | 5,090 | 5,541 | 5,889 | 828 | 16 % | 6 % | ||||
Diluted (loss) earnings per ADS | (48.18) | 9.97 | (0.87) | (0.12) | (98 %) | - | ||||
Diluted earnings per ADS (non-GAAP) [2] | 14.66 | 15.79 | 16.87 | 2.37 | 15 % | 7 % | ||||
Adjusted EBITDA [2] | 5,962 | 7,054 | 8,879 | 1,248 | 49 % | 26 % | ||||
Adjusted EBITDA margin | 19 % | 24 % | 27 % | 27 % | ||||||
[1] Unless otherwise noted, RMB to USD was converted at an exchange rate of RMB7.1135 as of September 30, 2022, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Translations are provided solely for the convenience of the reader. | ||||||||||
[2] Non-GAAP measures are defined in the Non-GAAP Financial Measures section (see also "Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures" for more details). | ||||||||||
Baidu Core | ||||||||||
Q3 | Q2 | Q3 | ||||||||
(In millions, unaudited) | 2021 | 2022 | 2022 | YOY | QOQ | |||||
RMB | RMB | RMB | US$ | |||||||
Total revenues | 24,661 | 23,160 | 25,239 | 3,548 | 2 % | 9 % | ||||
Operating income | 3,718 | 3,246 | 4,982 | 700 | 34 % | 53 % | ||||
Operating income (non-GAAP) [2] | 5,823 | 5,121 | 6,650 | 935 | 14 % | 30 % | ||||
Net (loss) income to Baidu Core | (15,625) | 3,716 | 25 | 4 | - | (99 %) | ||||
Net income to Baidu Core (non-GAAP) [2] | 5,855 | 5,449 | 5,767 | 811 | (2 %) | 6 % | ||||
Adjusted EBITDA [2] | 6,994 | 6,597 | 8,239 | 1,158 | 18 % | 25 % | ||||
Adjusted EBITDA margin | 28 % | 28 % | 33 % | 33 % | ||||||
Operational Highlights
Corporate
- Baidu returned US$272 million to shareholders since Q3 2022, bringing the cumulative repurchase to $3.2 billion under the 2020 Share Repurchase Program.
AI Cloud
- As of the end of the third quarter of 2022, Baidu ACE smart transportation solutions have been adopted by 63 cities, up from 24 cities a year ago, based on the contract value of over RMB10 million for each city.
Intelligent Driving
- Baidu Apollo's auto solutions continued to gain traction among leading automakers:
– One of China's largest automotive and technology companies intended to use ANP (Apollo Navigation Pilot), AVP (Automated Valet Parking) and HD Maps for another popular car model. The partnership is an extension of existing collaboration, validating an increasing appetite for ASD (Apollo Self Driving) solutions from automakers.
- Apollo Go continued to progress rapidly and remained the largest autonomous ride-hailing service provider worldwide:
– Apollo Go provided more than 474K rides in the third quarter of 2022, up 311% year over year and 65% quarter over quarter. The accumulated rides provided to the public by Apollo Go reached 1.4 million by the third quarter of 2022.
Other Growth Initiatives
- Xiaodu ranked No.1 in smart display shipments and smart speaker shipments in China for 2Q22, according to IDC, Strategy Analytics and Canalys.
Mobile Ecosystem
- In September, Baidu App's MAUs reached 634 million, up 5% year over year.
- Revenue from Managed Page grew by 13% year over year and reached 51% of Baidu Core's online marketing revenue in the third quarter of 2022.
iQIYI
iQIYI's average daily number of total subscribing members for the quarter was 101.0 million, compared to 104.7 million for the third quarter of 2021 and 98.3 million for the second quarter of 2022.
Third Quarter 2022 Financial Results
Total revenues were RMB 32.5 billion ($4.57 billion), increasing 2% year over year.
- Revenue from Baidu Core was RMB 25.2 billion ($3.55 billion), increasing 2% year over year; online marketing revenue was RMB 18.7 billion ($2.63 billion), decreasing 4% year over year but improved 10% from the second quarter as macro has improved gradually since June, and non-online marketing revenue was RMB 6.5 billion ($916 million), up 25% year over year, driven by AI Cloud and other AI-powered businesses.
- Revenue from iQIYI was RMB 7.5 billion ($1.05 billion), decreasing 2% year over year.
Cost of revenues was RMB 16.3 billion ($2.29 billion), increasing 1% year over year.
Selling, general and administrative expenses were RMB 5.2 billion ($730 million), decreasing 29% year over year, primarily due to a decrease in channel spending and promotional marketing.
Research and development expense was RMB 5.8 billion ($809 million), decreasing 7% year over year, primarily due to a decrease in staff related expenses.
Operating income was RMB 5.3 billion ($747 million). Baidu Core operating income was RMB 5.0 billion ($700 million), and Baidu Core operating margin was 20%. Non-GAAP operating income was RMB 7.2 billion ($1.01 billion). Non-GAAP Baidu Core operating income was RMB 6.7 billion ($935 million), and non-GAAP Baidu Core operating margin was 26%.
Total other loss, net was RMB 4.8 billion ($670 million), decreasing 78% year over year, which mainly includes a fair value loss of RMB 3.1 billion and an impairment of long-term investments of RMB 1.4 billion. In the third quarter of 2021, we recognized a fair value loss of RMB 18.9 billion. A significant portion of long-term investments, including but not limited to investments in equity securities of public and private companies, private equity funds and digital assets, is subject to quarterly fair value adjustments, which may contribute to net income volatility in future periods.
Income tax expense was RMB 908 million ($128 million), compared to an income tax benefit of RMB 1.8 billion for Q3' 21, primarily due to an increase in deferred tax benefit recognized on fair value loss of long-term investments and deduction on certain expenses that were previously considered non-deductible in the third quarter of 2021.
Net loss attributable to Baidu was RMB 146 million ($21 million), and diluted loss per ADS was RMB 0.87 ($0.12). Net income attributable to Baidu Core was RMB 25 million ($4 million). Non-GAAP net income attributable to Baidu was RMB 5.9 billion ($828 million). Non-GAAP diluted earnings per ADS was RMB 16.87 ($2.37). Non-GAAP net income attributable to Baidu Core was RMB 5.8 billion ($811 million), and non-GAAP net margin for Baidu Core was 23%.
Adjusted EBITDA was RMB 8.9 billion ($1.25 billion) and adjusted EBITDA margin was 27%. Adjusted EBITDA for Baidu Core was RMB 8.2 billion ($1.16 billion) and adjusted EBITDA margin for Baidu Core was 33%.
As of September 30, 2022, cash, cash equivalents, restricted cash and short-term investments were RMB 184.5 billion ($25.94 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB 179.5 billion ($25.23 billion). Free cash flow was RMB 6.6 billion ($921 million), and free cash flow excluding iQIYI was RMB 6.4 billion ($900 million).
Conference Call Information
Baidu's management will hold an earnings conference call at 7:30AM on November 22, 2022, U.S. Eastern Time (8:30PM on November 22, 2022, 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 Q3 2022 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 clickhttps://s1.c-conf.com/diamondpass/10026844-g6c9hw.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.