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Baidu Announces First Quarter 2018 Results
"We had a strong start in 2018, with our core business exhibiting robust growth, and we continue to execute on our strategy to strengthen
"
First Quarter 2018 Financial Highlights
- Total revenues were
RMB 20.9 billion ($3.33 billion ), increasing 31% year over year. Mobile revenue represented 78% of total net revenues, compared to 70% for the first quarter of 2017. Total revenues of Baidu Core wereRMB 16.1 billion ($2.57 billion ), increasing 26% year over year. - Operating income was
RMB 4.6 billion ($728 million ), increasing 128% year over year. Operating margin reached 22%, compared to 13% for the first quarter of 2017. - Non-GAAP operating income was
RMB 5.3 billion ($852 million ), increasing 103% year over year. Non-GAAP operating margin reached 26%, compared to 17% for the first quarter of 2017. Non-GAAP operating income of Baidu Core, excluding iQIYI, wasRMB 6.4 billion , increasing 81% year over year. Non-GAAP operating margin of Baidu Core, excluding iQIYI, was 39%, compared to 27% for the first quarter of 2017. - Net income attributable to
Baidu wasRMB 6.7 billion ($1.1 billion ) and diluted earnings attributable toBaidu per ADS wasRMB 19 ($2.98) . Non-GAAP net income attributable to Baidu[3] wasRMB 4.6 billion ($731 million ) and non-GAAP diluted earnings per ADS[4] wasRMB 13 ($2.08) . - Adjusted EBITDA was
RMB 6.1 billion ($979 million ), or 29% of total revenues, increasing 69% year over year.
Other Highlights
Corporate
- iQIYI,
Baidu's online entertainment subsidiary, raisedUS$2.25 billion through its initial public offering of 125,000,000 American Depositary Shares ("ADS") atUS$18.00 per ADS.IQIYI's ADSs trade on theNASDAQ Global Market under the symbol "IQ". Baidu raisedUS$1.5 billion through a public bond offering consisting ofUS$1 billion of 3.875% notes due 2023 andUS$500 million of 4.375% notes due 2028, the proceeds from which will mostly be used to repay aUS$1.0 billion bond maturing inAugust 2018 .Baidu signed a cooperation memorandum with the Haidian municipality ofBeijing to jointly develop smart government administration, smart transportation and smart city management. The two parties will work together to develop an AI-based "Smart City Brain" to handle traffic management, environmental protection and public safety.Baidu established aQuantum Computing Research Lab inBeijing to perform research and development in quantum computing.- TIME magazine featured
Robin Li as "The Innovator" on the cover page of itsJanuary 29, 2018 Asia edition.
Search and feed
Baidu begins using reinforcement learning in its Phoenix Nest online marketing system, which is the first time this branch of machine learning has been implemented atBaidu .- Official press agencies, including the
People's Daily ,Xinhua News Agency and CCTV, have opened BJH accounts,Baidu's publisher platform (a.k.a. Baijiahao), to share their content to theBaidu app. Baidu removed 20.2 billion malicious webpages in 2017, according toBaidu's 2017 Information Security Report.
Apollo
Baidu received the first batch of licenses to conduct open road test for autonomous vehicles inBeijing andChongqing municipalities andFujian province.Baidu held a successful Apollo 2.5 Launch Event inBeijing onApril 19 , which also marked Apollo's one year anniversary. At the event,Baidu released Apollo 2.5, which supports high-speed road conditions, improves cost efficiency, enhances developer support and provides Apollo Scape open datasets.Baidu showcased its Level 4 autonomous driving technology during the Chinese Spring Festival Gala on CCTV, one of the most watched TV shows inChina . More than a dozen Apollo-powered vehicles drove across theHong Kong-Zhuhai-Macau Bridge in choreographed swerving formation, depicting a "robotic parade."Baidu formed a strategic partnership with Great Wall Motor, the largest sport utility vehicle and pick-up truck manufacturer inChina , to collaborate on autonomous driving, big data, mobility and networking solutions.Baidu formed a strategic partnership with BYD, one of the leading auto manufacturers inChina , on autonomous driving. BYD plans commercial production of Level 3 autonomous vehicles using Apollo around 2020.Baidu formed a strategic partnership with Sokon Group, an automobile manufacturer inChina , for commercial production of Level 3 vehicles around 2020 and Level 4 vehicles around 2021.Baidu and Sokon will collaborate on autonomous driving, Internet-connected vehicles, cloud services and marketing.Baidu joined Berkeley DeepDrive, a research alliance that studies state-of-the-art technologies in computer vision and machine learning for automotive applications.
DuerOS
- Ainemo launched "Xiaodu @ Home" Touchscreen Smart Speaker powered by DuerOS Assistant and 10,000 units were sold within the first minute of launch online.
Baidu formed a strategic partnership with Hong Kong Skyworth Digital Holdings, a leading television manufacturer inChina . DuerOS Assistant will be integrated into Skyworth's smart TVs to provide users with a conversational AI service.- TCL, a leading consumer electronics manufacturer, launched three new television models (X5, C6 and P5) powered by DuerOS Assistant.
Baidu formed a strategic partnership with XGIMI, a leading smart projector manufacturer, to integrate DuerOS Assistant in its products.Baidu formed a strategic partnership with BroadLink Electronic Technology, a leading smart plug and remote manufacturer, to integrate DuerOS Assistant in its home electronics control devices.Baidu formed a strategic partnership with Xiaotiancai, a manufacturer of wearables for kids, to integrate DuerOS Assistant in its smart watches.Baidu formed a strategic partnership withHaier , a leading home electronics and appliance manufacturer, to collaborate on DuerOS andHaier's U+ smarthome platform.
AI Technology
- MIT
Technology Review namedBaidu as a key player for near-real-time translation, one of the top breakthrough technologies of 2018. - Baidu PyramidBox, a deep learning algorithm for face recognition, reached the highest score of
WIDER FACE , a highly challenging face detection benchmark globally.
In the following section, comparison and analysis are provided based on reported consolidated financial results.
First Quarter 2018 Results
Total revenues reached
Content costs were
Traffic acquisition cost was
Bandwidth costs were
Other cost of revenues, which include depreciation costs, operation costs, sales tax and surcharges and share-based compensation expenses, was
Selling, general and administrative expenses were
Research and development expenses were
Share-based compensation expenses, which were allocated to related operating cost and expense line items, were
Operating income was
Other income, net was
Income tax expense was
Net income attributable to
As of
The Company is planning to dispose of a majority equity stake in
Financial Guidance
For the second quarter of 2018,
Conference Call Information
International: |
+65 67135090 |
China |
4006208038 |
US: |
+1 8456750437 |
UK: |
+44 2036214779 |
Hong Kong: |
+852 30186771 |
Passcode for all regions: |
3162748 |
A replay of the conference call may be accessed by phone at the following number until
International: |
+61 2 8199 0299 |
Passcode: |
3162748 |
Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com.
About
Contacts
Investors Relations,
Tel: +86-10-5992-4958
Email: ir@baidu.com
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, the outlook for the second quarter of 2018, quotations from management in this announcement, as well as
Non-GAAP Financial Measures
To supplement
Non-GAAP operating income represents operating income excluding share-based compensation expenses.
Non-GAAP net income attributable to
For more information on non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures."
[1] This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of
[2] Starting from
[3] Non-GAAP net income attributable to
[4] Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated based on non-GAAP net income attributable to Baidu.
[5] Gross revenues under legacy GAAP reached
[6] The number of active online marketing customers and revenue per online active customer exclude our group-buying and delivery related businesses for consistency with previous reporting.
Baidu, Inc. |
||||
Condensed Consolidated Statements of Income |
||||
Three Months Ended |
||||
March 31, |
December 31, |
March 31, |
||
(In RMB millions except for share, per share (or ADS) information) |
2017 |
2017 |
2018 |
|
Unaudited |
Unaudited |
Unaudited |
||
Revenues: |
||||
Online marketing services |
14,738 |
20,418 |
17,169 |
|
Others |
2,153 |
3,138 |
3,738 |
|
Total revenues(note 1) |
16,891 |
23,556 |
20,907 |
|
Operating costs and expenses: |
||||
Content costs |
2,636 |
3,754 |
4,194 |
|
Traffic acquisition costs |
2,185 |
2,518 |
2,256 |
|
Bandwidth costs |
1,336 |
1,400 |
1,472 |
|
Others |
3,076 |
3,774 |
1,981 |
|
Cost of revenues (note 2) |
9,233 |
11,446 |
9,903 |
|
Selling, general and administrative (note 2) |
2,817 |
3,632 |
3,142 |
|
Research and development (note 2) |
2,835 |
3,704 |
3,294 |
|
Total operating costs and expenses |
14,885 |
18,782 |
16,339 |
|
Operating income |
2,006 |
4,774 |
4,568 |
|
Other income: |
||||
Interest income |
649 |
917 |
821 |
|
Interest expense |
(323) |
(400) |
(352) |
|
Foreign exchange loss, net |
(101) |
(113) |
(48) |
|
Income(loss) from equity method investments |
(76) |
204 |
(177) |
|
Other income(loss), net |
21 |
(294) |
1,856 |
|
Total other income |
170 |
314 |
2,100 |
|
Income before income taxes |
2,176 |
5,088 |
6,668 |
|
Income taxes |
405 |
929 |
1,120 |
|
Net income |
1,771 |
4,159 |
5,548 |
|
Less: net income (loss) attributable to noncontrolling interests |
(6) |
0 |
(1,146) |
|
Net income attributable to Baidu |
1,777 |
4,159 |
6,694 |
|
Earnings per share for Class A and Class B ordinary shares: |
||||
Net income attributable to Baidu -Basic |
46.47 |
125.02 |
188.60 |
|
Net income attributable to Baidu -Diluted |
46.29 |
123.81 |
186.76 |
|
Earnings per ADS (1 Class A ordinary share equals 10 ADSs ): |
||||
Net income attributable to Baidu -Basic |
4.65 |
12.50 |
18.86 |
|
Net income attributable to Baidu -Diluted |
4.63 |
12.38 |
18.68 |
|
Weighted average number of Class A and Class B ordinary shares outstanding: |
||||
Basic |
34,734,019 |
34,783,969 |
34,838,392 |
|
Diluted |
34,869,783 |
35,123,903 |
35,180,950 |
|
(1) Starting on January 1, 2018, valued added tax has been reclassified from cost of revenues to net against revenues. |
||||
To increase comparability of operating results and help investors better understand our business performance and |
||||
trends, 2017 net revenues have been presented. 2017 net revenues are defined as gross revenues under legacy |
||||
GAAP after the deduction of value added-taxes, which is presented on the same basis as 2018 and going forward. |
||||
Gross revenues |
16,891 |
23,556 |
22,162 |
|
Less: value added taxes |
946 |
1,327 |
1,255 |
|
Net revenues |
15,945 |
22,229 |
20,907 |
|
(2) Includes share-based compensation expenses as follows: |
||||
Cost of revenues |
36 |
46 |
35 |
|
Selling, general and administrative |
187 |
298 |
291 |
|
Research and development |
408 |
633 |
452 |
|
Total share-based compensation expenses |
631 |
977 |
778 |
Baidu, Inc. |
|||
Condensed Consolidated Balance Sheets |
|||
December 31, |
March 31, |
||
(In RMB millions except for number of shares and per share data) |
2017 |
2018 |
|
Audited |
Unaudited |
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
11,084 |
21,025 |
|
Restricted cash |
252 |
0 |
|
Short-term investments |
89,381 |
89,433 |
|
Other invested securities |
18,350 |
0 |
|
Accounts receivable, net |
4,571 |
4,764 |
|
Loans and interest receivable, net |
23,938 |
0 |
|
Amounts due from related parties |
168 |
421 |
|
Other assets, current |
3,425 |
4,148 |
|
Assets held for sale |
0 |
46,993 |
|
Total current assets |
151,169 |
166,784 |
|
Non-current assets: |
|||
Fixed assets, net |
12,475 |
13,666 |
|
Intangible assets, net |
5,467 |
5,998 |
|
Goodwill |
15,806 |
15,806 |
|
Long-term investments, net |
56,283 |
59,488 |
|
Loans and interest receivable, net |
3,467 |
0 |
|
Amounts due from related parties |
9 |
61 |
|
Deferred tax assets, net |
1,532 |
1,312 |
|
Other assets, non-current |
5,520 |
6,352 |
|
Total non-current assets |
100,559 |
102,683 |
|
Total assets |
251,728 |
269,467 |
|
LIABILITIES AND EQUITY |
|||
Current liabilities: |
|||
Short-term loans |
1,244 |
397 |
|
Amounts due to the third-party investors |
38,486 |
- |
|
Accounts payable and accrued liabilities |
27,523 |
27,222 |
|
Customer advances and deposits |
6,785 |
6,801 |
|
Deferred revenue |
788 |
792 |
|
Deferred income |
568 |
569 |
|
Long-term loans, current portion |
10 |
10 |
|
Notes payable,current portion |
6,500 |
6,270 |
|
Amounts due to related parties |
153 |
179 |
|
Liabilities held for sale |
- |
41,166 |
|
Total current liabilities |
82,057 |
83,406 |
|
Non-current liabilities: |
|||
Deferred income |
73 |
75 |
|
Long-term loans |
6,701 |
6,473 |
|
Notes payable |
29,111 |
37,423 |
|
Deferred tax liabilities |
3,375 |
3,359 |
|
Other non-current liabilities |
39 |
55 |
|
Total non-current liabilities |
39,299 |
47,385 |
|
Total liabilities |
121,356 |
130,791 |
|
Redeemable noncontrolling interests |
11,022 |
11,146 |
|
Equity |
|||
Class A Ordinary Shares, par value US$0.00005 per share, 825,000,000 shares authorized, and 27,614,978 shares and 27,671,709 shares issued and outstanding as at December 31, 2017 and March 31, 2018 |
- |
- |
|
Class B Ordinary Shares, par value US$0.00005 per share, 35,400,000 shares authorized, and 7,201,254 shares and 7,201,254 shares issued and outstanding as at December 31, 2017 and March 31, 2018 |
- |
- |
|
Additional paid-in capital |
12,088 |
13,009 |
|
Retained earnings |
102,328 |
110,425 |
|
Accumulated other comprehensive income |
930 |
1,070 |
|
Total Baidu, Inc. shareholders' equity |
115,346 |
124,504 |
|
Noncontrolling interests |
4,004 |
3,026 |
|
Total equity |
119,350 |
127,530 |
|
Total liabilities, redeemable noncontrolling interests, and equity |
251,728 |
269,467 |
Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures (in RMB millions except for share and per ADS information, unaudited) |
|||||
Three months ended |
|||||
March 31, |
December 31, |
March 31, |
|||
Operating income - Baidu Core |
2,961 |
6,012 |
5,624 |
||
Add: Share-based compensation expenses |
553 |
925 |
731 |
||
Non-GAAP operating income - Baidu Core |
3,514 |
6,937 |
6,355 |
||
Add: Depreciation of fixed assets |
840 |
901 |
691 |
||
Add: Amortization of intangible assets |
49 |
32 |
26 |
||
Adjusted EBITDA - Baidu Core |
4,403 |
7,870 |
7,072 |
||
Operating loss - iQIYI |
(1,040) |
(856) |
(1,062) |
||
Add: Share-based compensation expenses |
78 |
52 |
47 |
||
Non-GAAP operating loss - iQIYI |
(962) |
(804) |
(1,015) |
||
Add: Depreciation of fixed assets |
82 |
92 |
64 |
||
Add: Amortization of intangible assets |
18 |
17 |
12 |
||
Adjusted EBITDA - iQIYI |
(862) |
(695) |
(939) |
||
Operating income - consolidated |
2,006 |
4,774 |
4,568 |
||
Add: Share-based compensation expenses |
631 |
977 |
778 |
||
Non-GAAP operating income - consolidated |
2,637 |
5,751 |
5,346 |
||
Add: Depreciation of fixed assets |
922 |
993 |
755 |
||
Add: Amortization of intangible assets |
67 |
49 |
38 |
||
Adjusted EBITDA-consolidated |
3,626 |
6,793 |
6,139 |
||
Three months ended |
|||||
March 31, |
December 31, |
March 31, |
|||
Net income attributable to Baidu |
1,777 |
4,159 |
6,694 |
||
Add: Share-based compensation expenses |
631 |
977 |
778 |
||
Add: (Gain)loss associated with the dilution of equity method investees, net of tax |
(16) |
87 |
53 |
||
Add: Disposal loss, net of tax |
3 |
5 |
489 |
||
Add: Impairment of long-term investments, net of tax |
0 |
338 |
83 |
||
Add: Fair value change of long-term investments, net of tax |
0 |
0 |
(3,512) |
||
Non-GAAP net income attributable to Baidu |
2,395 |
5,566 |
4,585 |
||
Weighted average number of ADS used in computing non- |
348,697,827 |
351,239,027 |
351,809,497 |
||
GAAP diluted earnings per ADS |
4.63 |
12.38 |
18.68 |
||
Add: Accretion of the redeemable noncontrolling interests |
0.47 |
(0.54) |
0.35 |
||
Add: Non-GAAP adjustments to earnings per ADS |
1.76 |
4.00 |
(6.00) |
||
Non-GAAP diluted earnings per ADS |
6.86 |
15.84 |
13.03 |
Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures (in RMB millions except for share and per ADS information, unaudited) |
||||||
Three Months Ended |
||||||
March 31, |
December 31, |
March 31, |
||||
(In RMB millions except for share, per share (or ADS) information) |
2017 |
2017 |
2018 |
|||
Unaudited |
Unaudited |
Unaudited |
||||
Baidu Core |
13,603 |
19,109 |
16,127 |
|||
iQIYI |
3,284 |
4,817 |
4,877 |
|||
Intersegment eliminations & adjustments |
4 |
(370) |
(97) |
|||
Total Revenues |
16,891 |
23,556 |
20,907 |
|||
Baidu Core |
2,961 |
6,012 |
5,624 |
|||
iQIYI |
(1,040) |
(856) |
(1,062) |
|||
Intersegment eliminations & adjustments |
85 |
(382) |
6 |
|||
Operating income |
2,006 |
4,774 |
4,568 |
|||
Baidu Core |
23% |
33% |
35% |
|||
iQIYI |
(34%) |
(19%) |
(22%) |
|||
Operating margin |
13% |
21% |
22% |
|||
Baidu Core |
3,514 |
6,937 |
6,355 |
|||
iQIYI |
(962) |
(804) |
(1,015) |
|||
Intersegment eliminations & adjustments |
85 |
(382) |
6 |
|||
Non-GAAP operating income |
2,637 |
5,751 |
5,346 |
|||
Baidu Core |
27% |
38% |
39% |
|||
iQIYI |
(31%) |
(18%) |
(21%) |
|||
Non-GAAP operating margin |
17% |
26% |
26% |
|||
Baidu Core |
4,403 |
7,870 |
7,072 |
|||
iQIYI |
(862) |
(695) |
(939) |
|||
Intersegment eliminations & adjustments |
85 |
(382) |
6 |
|||
Adjusted EBITDA |
3,626 |
6,793 |
6,139 |
|||
Baidu Core |
34% |
44% |
44% |
|||
iQIYI |
(28%) |
(15%) |
(19%) |
|||
Adjusted EBITDA margin |
23% |
31% |
29% |
SOURCE