Baidu Announces First Quarter 2023 Results

BEIJING, May 16, 2023 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU and HKEX: 9888) ("Baidu" or the "Company"), a leading AI company with strong Internet foundation, today announced its unaudited financial results for the first quarter ended March 31, 2023.

"In the first quarter of 2023, Baidu Core delivered a solid performance, with year-on-year revenue growth accelerating from previous quarters, supporting operating margin improvement through operating leverage," said Robin Li, Co-founder and CEO of Baidu. "We believe the emergence of generative AI and large language model presents a transformative potential of AI in various industries, to help people and organizations to achieve more and to place a positive impact on society. In light of this trend, Baidu has introduced its ERNIE Bot in China, which we plan to steadily incorporate into all our businesses. This will empower our products and offerings, drawing in a larger user and customer base, while allowing us to establish a new ecosystem around the ERNIE Bot for the new era. It will also enable us to drive long-term, sustainable growth."

"Non-GAAP operating margin of Baidu Core expanded to 23% in the quarter, up from 17% in the same period last year and 21% in the previous quarter, driven by our ability to leverage our operations effectively," said Rong Luo, CFO of Baidu. "Generative AI represents a new paradigm shift in the AI, and Baidu is poised to take advantage of this massive market opportunity. Baidu will continue to invest unwaveringly in this area in the coming quarters."

Operational Highlights

Corporate

• Baidu returned US$195 million to shareholders in Q1 2023.
• Baidu released its annual ESG Report on May 12, 2023, which details Baidu's latest ESG policies and sustainability initiatives (https://esg.baidu.com/ESG/Baidu_2022_ESG_Report.pdf).

Intelligent Driving

• Apollo Go, Baidu's autonomous ride-hailing service, provided around 660K rides in the first quarter of 2023, up 236% year over year and 18% quarter over quarter.
• Apollo Go received Beijing's first permits to operate ride-hailing services with no driver or safety operator in the vehicles, on March 17, 2023.

Other Growth Initiatives

• Xiaodu ranked No.1 in smart display shipments and smart speaker shipments in China for 2022, according to IDC and Canalys.

Mobile Ecosystem

• In March, Baidu App's MAUs reached 657 million, up 4% year over year.
• Managed Page accounted for 49% of Baidu Core's online marketing revenue in the first quarter of 2023.

iQIYI

• iQIYI's average daily number of total subscribing members for the quarter was 129 million, compared to 101 million for the first quarter of 2022 and 112 million for the fourth quarter of 2022.

First Quarter 2023 Financial Results

Total revenues were RMB 31.1 billion ($4.54 billion), increasing 10% year over year.

• Revenue from Baidu Core was RMB 23.0 billion ($3.35 billion), increasing 8% year over year; online marketing revenue was RMB 16.6 billion ($2.42 billion), up 6% year over year, and non-online marketing revenue was RMB 6.4 billion ($928 million), up 11% year over year.
• Revenue from iQIYI was RMB 8.3 billion ($1.22 billion), increasing 15% year over year.

Cost of revenues was RMB 15.2 billion ($2.21 billion), decreasing 3% year over year, primarily due to a decrease in content costs, bandwidth costs and cost of goods sold, partially offset by the increase of traffic acquisition costs.

Selling, general and administrative expenses were RMB 5.6 billion ($814 million), increasing 20% year over year, primarily due to an increase in channel spending and promotional marketing expenses.

Research and development expense was RMB 5.4 billion ($790 million), decreasing 3% year over year, primarily due to a decrease in personnel related expense.

Operating income was RMB 5.0 billion ($725 million). Baidu Core operating income was RMB 4.1 billion ($596 million), and Baidu Core operating margin was 18%. Non-GAAP operating income was RMB 6.4 billion ($936 million). Non-GAAP Baidu Core operating income was RMB 5.4 billion ($781 million), and non-GAAP Baidu Core operating margin was 23%.

Total other income, net was RMB 2.6 billion ($378 million), which mainly included a fair value gain of RMB 1.5 billion from long-term investments. Total other loss, net was RMB 3.0 billion for the same period last year, which mainly included a fair value loss of RMB 3.0 billion from long-term investments. A significant portion of long-term investments, including but not limited to investments in equity securities of public and private companies, private equity funds, is subject to quarterly fair value adjustments, which may contribute to net income volatility in future periods.

Income tax expense was RMB 1.2 billion ($174 million), increasing 205% year over year, primarily due to an increase in profit before tax.

Net income attributable to Baidu was RMB 5.8 billion ($848 million), and diluted earnings per ADS was RMB 15.92 ($2.32). Net income attributable to Baidu Core was RMB 5.5 billion ($803 million), and net margin for Baidu Core was 24%. Non-GAAP net income attributable to Baidu was RMB 5.7 billion ($834 million). Non-GAAP diluted earnings per ADS was RMB 16.10 ($2.34). Non-GAAP net income attributable to Baidu Core was RMB 5.3 billion ($767 million), and non-GAAP net margin for Baidu Core was 23%.

Adjusted EBITDA was RMB 8.1 billion ($1.19 billion) and adjusted EBITDA margin was 26%. Adjusted EBITDA for Baidu Core was RMB 7.0 billion ($1.02 billion) and adjusted EBITDA margin for Baidu Core was 30%. 

As of March 31, 2023, cash, cash equivalents, restricted cash and short-term investments were RMB 194.0 billion ($28.25 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB 188.8 billion ($27.49 billion). Free cash flow was RMB 4.5 billion ($661 million), and free cash flow excluding iQIYI was RMB 3.5 billion ($515 million).

Conference Call Information

Baidu's management will hold an earnings conference call at 8 AM on May 16, 2023, U.S. Eastern Time (8 PM on May 16, 2023, 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 Q1 2023 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/10030497-jz1rwg.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 (loss), non-GAAP operating margin, non-GAAP net income (loss) 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, 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 or loss, impairment of long-term investments, fair value change 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 shares, 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.