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Baidu Announces Fourth Quarter and Fiscal Year 2019 Results

Feb 27, 2020

BEIJING, Feb. 27, 2020 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU) ("Baidu" or the "Company"), a leading search engine, knowledge and information centered Internet platform and AI company, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2019[1].

"We finished 2019 making tremendous progress in strengthening Baidu's mobile ecosystem. Through the building blocks of BJH publisher accounts, Smart Mini Program and Managed Page, Baidu App provides users single log-on, native-app-like experience to a wide range of information and services dispersed across isolated mobile apps and HTML5 websites. Baidu App's spanning mobile ecosystem has resulted in more users logging in, DAUs growing robustly to 195 million in December, up 21% year over year, and in-app search queries increasing almost 30% year over year," said Robin Li, Chairman and CEO of Baidu. "Baidu new AI businesses have also made great strides in 2019, as we built leadership in smart devices, smart transportation and enterprise cloud solutions with Baidu's leading AI technologies."

"Baidu delivered solid fourth quarter results with increasing year-over-year revenue growth rate, allowing 2019 revenue to reach RMB 107 billion, or US$15.4 billion," said Herman Yu, CFO of Baidu. "Baidu's quarterly operating margin has also been improving, through the strengthening of Baidu's mobile ecosystem and our focus on resource investment returns. Our leaner financial model and strong balance sheet put us in a good position to weather the slowing macro, while continuing to invest heavily in technology and new businesses, to optimize future growth."

Fourth Quarter 2019 Financial Highlights

 

Baidu, Inc.

 

For the three-month ended

(In millions except for per ADS information,
unaudited)

December 31,
2018

 

September 30,
2019

 

December 31,
2019

 

YOY

 

QOQ

 

December 31,
2019

 

RMB

 

RMB

 

RMB

         

US$

Total revenues 

27,195

 

28,080

 

28,884

 

6%

 

3%

 

4,149

Operating income

1,112

 

2,355

 

4,655

 

319%

 

98%

 

669

Operating margin

4%

 

8%

 

16%

           

Non-GAAP operating income

2,747

 

3,691

 

6,753

 

146%

 

83%

 

970

Non-GAAP operating margin

10%

 

13%

 

23%

           
                       

Net income (loss) attributable to Baidu

2,081

 

(6,373)

 

6,345

 

205%

 

-

 

911

Net margin

8%

 

(23%)

 

22%

           

Non-GAAP net income attributable to Baidu

4,703

 

4,387

 

9,193

 

95%

 

110%

 

1,320

Non-GAAP net margin

17%

 

16%

 

32%

           

Diluted earnings (loss) per ADS

5.93

 

(18.37)

 

18.25

 

208%

 

-

 

2.62

Non-GAAP diluted earnings per ADS

13.42

 

12.61

 

26.54

 

98%

 

110%

 

3.81

                       
 

Baidu Core

 

For the three-month ended

(In millions except for per ADS information,

December 31,

 

September 30,

 

December 31,

         

December 31,

unaudited)

2018

 

2019

 

2019

 

YOY

 

QOQ

 

2019

 

RMB

 

RMB

 

RMB

         

US$

Total revenues 

20,520

 

21,010

 

21,711

 

6%

 

3%

 

3,119

Operating income

4,433

 

5,191

 

6,870

 

55%

 

32%

 

987

Operating margin

22%

 

25%

 

32%

           

Non-GAAP operating income

5,788

 

6,224

 

8,492

 

47%

 

36%

 

1,220

Non-GAAP operating margin

28%

 

30%

 

39%

           

Net income (loss) attributable to Baidu Core

4,050

 

(4,287)

 

7,433

 

84%

 

-

 

1,068

Net margin

20%

 

(20%)

 

34%

           

Non-GAAP net income attributable to Baidu Core

6,513

 

6,310

 

9,950

 

53%

 

58%

 

1,429

Non-GAAP net margin

32%

 

30%

 

46%

           

Fiscal Year 2019 Financial Highlights

 

Baidu, Inc.

 

For the twelve-month ended 

(In millions except for per ADS information, 

December 31,

 

December 31,

         

December 31,

unaudited)

2018

 

2019

 

YOY

 

YOY[2] 

 

2019

 

RMB

 

RMB

         

US$

Total revenues 

102,277

 

107,413

 

5%

 

8%

 

15,429

Operating income

15,530

 

6,307

 

(59%)

     

906

Operating margin 

15%

 

6%

           

Non-GAAP operating income

20,425

 

12,800

 

(37%)

     

1,839

Non-GAAP operating margin 

20%

 

12%

           

Net income attributable to Baidu

27,573

 

2,057

 

(93%)

     

296

Net margin

27%

 

2%

           

Non-GAAP net income attributable to Baidu

23,976

 

18,182

 

(24%)

     

2,612

Non-GAAP net margin

23%

 

17%

           

Diluted earnings per ADS

78.03

 

5.60

 

(93%)

     

0.80

Non-GAAP diluted earnings per ADS

68.17

 

52.04

 

(24%)

     

7.48

                   
 

Baidu Core

 

For the twelve-month ended 

(In millions except for per ADS information, 

December 31,

 

December 31,

         

December 31,

unaudited)

2018

 

2019

 

YOY

 

YOY[2]

 

2019

 

RMB

 

RMB

         

US$

Total revenues 

78,271

 

79,711

 

2%

 

6%

 

11,450

Operating income

23,808

 

15,261

 

(36%)

     

2,192

Operating margin 

30%

 

19%

           

Non-GAAP operating income

28,020

 

20,311

 

(28%)

     

2,917

Non-GAAP operating margin 

36%

 

25%

           

Net income attributable to Baidu Core

33,605

 

7,580

 

(77%)

     

1,089

Net margin

43%

 

10%

           

Non-GAAP net income attributable to Baidu Core

29,059

 

22,824

 

(21%)

     

3,278

Non-GAAP net margin

37%

 

29%

           

Other Highlights

Corporate

  • Baidu employees have devoted significant efforts to help contain the novel coronavirus outbreak and fulfill the Company's corporate social responsibility, including the following:
    - On Baidu App, the Company launched a free medical consultation platform, to provide online access to doctors, answer pneumonia-related questions and save hospital resources. Baidu also partnered with medical experts to provide authoritative information on the novel coronavirus and leveraged its large platform reach to make available timely, reliable information to the public.
    - Baidu Maps is providing timely information, including the location of traffic control areas, designated hospitals and infected cases, to help users cope with the coronavirus outbreak. By leveraging big data, Baidu Maps helps track population migration and predict the spread of the epidemic in China.
    - Baidu leveraged its facial recognition and other AI technologies to develop and deploy many fever-screening systems to railway stations, hospitals and municipal government buildings in China. Baidu's fever-screening system can remotely measure the temperature of up to 200 people per minute, detect body temperatures of people wearing face masks and hats, and identify those not wearing masks or wearing them improperly. Baidu's AI model has also been open sourced, to further help reduce the spread of the coronavirus.
    - Baidu has pledged RMB 300 million to these efforts, provide awareness education and improve public health in China.
  • The Company reported its ESG progress for 2019, noting: 1) Baidu AI has helped reunite over 10,000 missing persons with their families; and 2) Baidu data centers reduced carbon emissions by over 180,000 tons in 2019, with the average power usage effectiveness (PUE) of its data centers reaching 1.14, far exceeding the global industry average of 1.67 according to Uptime Institute, a globally recognized data center advisory organization.
  • Baidu returned $149 million to its shareholders in the fourth quarter of 2019, under the 2019 Share Repurchase Program.

Mobile Ecosystem

  • Baidu App's average daily active users ("DAUs") reached 195 million, up 21% year over year, in December 2019.
  • Baidu App's large user scale and unique search-plus-feed distribution channels are attracting more original content creators, with BJH publisher accounts for Baidu feed, reaching 2.6 million, up 38% year over year, in December 2019.
  • Baidu has partnered with major TV and provincial satellite stations, to provide TV streaming and VOD in Baidu App and short video apps. Through Baidu's mobile building blocks, TV stations can leverage Baidu's powerful content distribution channels to extend their reach and allow online users to engage with the TV shows.
  • Merchants with HTML5 websites across many industries are switching to Baidu Managed Page, as the landing page for their search result. Revenue from Baidu Managed Page reached almost a quarter of Baidu Core's online marketing services revenue in the fourth quarter of 2019.
  • Merchants with app development capabilities are adopting Baidu Smart Mini Program, whose monthly active users ("MAUs") reached 316 million, up 114% year over year, in December 2019.
  • All six major express delivery companies in China have adopted Baidu Smart Mini Program, which provides native-app-like experience to logged-in users, such as allowing them to check the shipping status of their e-commerce orders and request for an express delivery simply by searching "express delivery" in Baidu App.
  • Baidu Smart Mini Program is also extending its reach to government services. For example, employees in China can check the information of their housing fund, similar to social security in the U.S., by simply scanning their face with Baidu App, as a logged-in user.

DuerOS

  • Monthly voice queries on DuerOS, a leading voice assistant for the Chinese language, surpassed 5.0 billion, up over 3 fold year over year, in December 2019. Monthly voice queries from Xiaodu first-party devices were 2.3 billion, up over 7 fold year over year.
  • DuerOS skills store now offers over 3,600 skills in wide ranging genres, including online education, gaming and live streaming. DuerOS developer community has expanded to over 38,000 members.
  • Xiaodu smart speakers ranked #1 in smart speaker shipments in China and Xiaodu Smart Display ranked #1 in smart display shipments globally for full year 2019, according to well-recognized market analytics firms Strategy Analytics and Canalys.
  • Baidu released Xiaodu Smart Display X8 in December 2019, with enhanced capabilities powered by Baidu AI, allowing users to wake the device up with eye gestures, pause streaming content with hand gestures and receive report on moving objects in the house when the owner leaves home.

Cloud, AI Services & AI Platform 

  • Baidu partnered with Shanghai Pudong Development Bank, to launch a blockchain alliance with major Chinese commercial banks for inter-bank information verification built on Baidu's Blockchain as a Service (BaaS) platform.
  • In November 2019, Baidu released its end-to-end far-field Automatic Speech Recognition (ASR) solutions, based on in-house designed Baidu Honghu AI chip. Baidu Brain's leading speech recognition capabilities are used across Baidu products, including Xiaodu smart speakers, DuerOS in-vehicle infotainment, Baidu Maps and Baidu call-center enterprise solutions. Developers have tapped Baidu Brain's speech recognition engine on Baidu open AI platform more than 10 billion times.
  • Baidu is applying Baidu Kunlun, its high-performance AI chip, optimizing visual, speech, natural language processing and other AI capabilities, to power the Company's cloud servers.
  • In December 2019, Baidu's pre-training framework for language understanding, ERNIE (Enhanced Representation through kNowledge IntEgration), became the first to score above 90 on the General Language Understanding Evaluation benchmark, or GLUE, which is widely considered as the benchmark for testing AI language understanding and otherwise dominated by U.S. technology firms and universities. ERNIE powers Baidu search and Xiaodu smart devices, to provide the best user experience.
  • Baidu Maps has been selected by Tesla China to provide map cloud services, such as real-time traffic condition reporting, base map display and point-of-interest search. Baidu Maps is a leading location based service platform, supporting 1.8 million developers and tracking 2 billion daily kilometers.

Apollo

  • Baidu partnered with Cangzhou, Hebei province, to develop smart transportation using Baidu's V2X solutions to improve traffic condition and safety. The adoption of Baidu's V2X solutions has led to a second Apollo robotaxi pilot program, launched in November 2019, with an initial fleet of 30 vehicles.
  • Baidu also partnered with Yinchuan, Ningxia province, to provide the provincial capital with Baidu's V2X solutions to support autonomous trucking.
  • At the Apollo Partner Conference in December 2019, Apollo v5.5 was released to support urban road point-to-point autonomous driving, as well as open-platform development for V2X and IoV solutions. Apollo has garnered 177 leading OEMs, suppliers and other partners, and over 36,000 developers worldwide.
  • Apollo fleet has reached 3 million test kilometers on the road in December 2019, spanning across 23 cities, including Beijing, Wuhan, Cangzhou and Changchun. The municipality of Beijing granted Baidu its first batch of 40 manned autonomous driving licenses in December 2019.

iQIYI

  • iQIYI subscribers reached 106.9 million in December 2019, adding 19.5 million subscribers year over year. iQIYI's large subscriber base further strengthens iQIYI's foundation to produce entertainment-oriented blockbuster originals.

Fourth Quarter 2019 Results

Total revenues reached RMB 28.9 billion ($4.15 billion), up 6% year over year and 3% quarter over quarter. Online marketing revenues were RMB 20.8 billion ($2.98 billion), decreasing 2% year over year and increasing 2% quarter over quarter. Other revenues were RMB 8.1 billion ($1.17 billion), increasing 35% year over year, driven mainly by the strong growth in cloud services, smart devices and iQIYI membership.

Revenue from Baidu Core reached RMB 21.7 billion ($3.12 billion), increasing 6% year over year and 3% quarter over quarter. Revenue from iQIYI reached RMB 7.5 billion ($1.08 billion), up 7% year over year. iQIYI membership revenue grew 21% year over year, offset by online advertising revenue declining 15% year over year.

Cost of revenues, were RMB 15.5 billion ($2.23 billion), decreasing 1% year over year, primarily due to a decrease in content costs and traffic acquisition costs, offset by increases in hardware and cloud cost of goods sold, impairment and amortization of intangible assets and depreciation expenses.

Selling, general and administrative expenses were RMB 4.0 billion ($568 million), decreasing 33% year over year, primarily due to decreased investment in channel spending and promotional marketing, as well as lower personnel related expenses.

Research and development expenses were RMB 4.8 billion ($683 million), increasing 5% year over year, primarily due to an increase in personnel related expenses.

Operating income was RMB 4.7 billion ($669 million) and operating margin was 16%. Baidu Core operating income was RMB 6.9 billion ($987 million), and Baidu Core operating margin was 32%.

Non-GAAP operating income was RMB 6.8 billion ($970 million), and non-GAAP operating margin was 23%. Non-GAAP Baidu Core operating income was RMB 8.5 billion ($1.22 billion), and non-GAAP Baidu Core operating margin was 39%.               

Total other income was RMB 699 million ($101 million), compared to total other loss of RMB 60 million for Q4 2018.

Income tax expense was RMB 304 million ($44 million), compared to RMB 484 million in Q4 2018.

Net income attributable to Baidu was RMB 6.3 billion ($ 911 million), and diluted earnings per ADS was RMB 18 ($2.62). Net income attributable to Baidu Core was RMB 7.4 billion ($1.07 billion). Non-GAAP net income attributable to Baidu was RMB 9.2 billion ($1.32 billion), and non-GAAP net margin was 32%. Non-GAAP diluted earnings per ADS amounted to RMB 27 ($3.81). Non-GAAP net income attributable to Baidu Core was RMB 10.0 billion ($1.43 billion), and non-GAAP net margin for Baidu Core was 46%.

Adjusted EBITDA was RMB 8.2 billion ($1.17 billion) and adjusted EBITDA margin was 28%. Adjusted EBITDA to Baidu Core was RMB 9.8 billion ($1.41 billion) and adjusted EBITDA margin for Baidu Core was 45%. 

As of December 31, 2019, cash, cash equivalents, restricted cash and short-term investments were RMB 147.4 billion ($21.17 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB 135.9 billion ($19.52 billion). Free cash flow was RMB 10.1 billion ($1.46 billion). Free cash flow excluding iQIYI was RMB 8.0 billion ($1.15 billion).

Fiscal Year 2019 Results

Total revenues reached RMB 107.4 billion ($15.43 billion), increasing 5% year over year, or 8% year over year, excluding the impact of announced divestures2. Online marketing revenues were RMB 78.1 billion ($11.22 billion), decreasing 5 % year over year. Other revenues were RMB 29.3 billion ($4.21 billion), increasing 44% year over year, driven mainly by the strong growth in iQIYI membership, cloud services and smart devices.

Revenue from Baidu Core reached RMB 79.7 billion ($11.45 billion), increasing 2% year over year, or increasing 6% year over year, excluding the impact of announced divestures2. Revenue from iQIYI reached RMB 29.0 billion ($4.17 billion), up 16% year over year. iQIYI membership revenue grew 36% year over year, offset by online advertising revenue declining 11% year over year.

Cost of revenues were RMB 62.9 billion ($9.03 billion), increasing 21% year over year, primarily due to increases in hardware and cloud cost of goods sold, content costs, depreciation expense, traffic acquisition costs and bandwidth costs.

Selling, general and administrative expenses were RMB 19.9 billion ($2.86 billion), increasing 4% year over year.

Research and development expenses were RMB 18.3 billion ($2.64 billion), increasing 16% year over year, primarily due to an increase in personnel related expenses.

Operating income was RMB 6.3 billion ($906 million) and operating margin was 6%. Baidu Core operating income was RMB 15.3 billion ($2.19 billion), and Baidu Core operating margin was 19%.

Non-GAAP operating income was RMB 12.8 billion ($1.84 billion), and non-GAAP operating margin was 12%. Non-GAAP Baidu Core operating income was RMB 20.3 billion ($2.92 billion), and non-GAAP Baidu Core operating margin was 25%.

Total other loss was RMB 6.6 billion ($955 million), mainly due to loss on equity investment arising from other-than-temporary decline, compared to total other income of RMB 11.8 billion for 2018, which was mainly due to disposal gains from Du Xiaoman and Global DU businesses. In Q4 2015, following a transaction where the Company exchanged shares of its majority-owned subsidiary Qunar for a minority stake in Trip.com, the Company deconsolidated Qunar, recorded its investment in Trip.com at the closing-date market value and recognized a non-cash accounting gain of RMB 24.4 billion. Since then, the market value of Trip.com shares has declined, and the continued low market price in 2019 resulted in the Company recognizing a non-cash impairment loss of RMB 8.9 billion in Q3 2019. In October 2019, the Company sold down its holding in Trip.com, reducing its interest from 19% to 12% of Trip.com's outstanding shares.

Income tax expense was RMB 1.9 billion ($279 million), compared to RMB 4.7 billion in 2018. The decrease in income tax expense was mainly due to lower taxable income from Baidu Core.

Net income attributable to Baidu was RMB 2.1 billion ($296 million), and diluted earnings per ADS was RMB 6 ($0.80). Net income attributable to Baidu Core was RMB 7.6 billion ($1.09 billion). Non-GAAP net income attributable to Baidu was RMB 18.2 billion ($2.61 billion), and non-GAAP net margin was 17%. Non-GAAP diluted earnings per ADS amounted to RMB 52 ($7.48). Non-GAAP net income attributable to Baidu Core was RMB 22.8 billion ($3.28 billion), and non-GAAP net margin for Baidu Core was 29%.

Adjusted EBITDA was RMB 18.4 billion ($2.65 billion) and adjusted EBITDA margin was 17%. Adjusted EBITDA to Baidu Core was RMB 25.5 billion ($3.66 billion) and adjusted EBITDA margin for Baidu Core was 32%. 

Free cash flow was RMB 22.0 billion ($3.17 billion). Free cash flow excluding iQIYI was RMB 18.9 billion ($2.71 billion).

Financial Guidance

For the first quarter of 2020, Baidu expects revenues to be between RMB 21.0 billion ($3.0 billion) and RMB 22.9 billion ($3.3 billion), representing a decline of 5% to 13% year over year, which assumes that Baidu Core revenue will decline between 10% and 18% year over year. The Coronavirus situation in China is evolving, and business visibility is very limited. The above forecast reflects Baidu's current and preliminary view, which is subject to substantial uncertainty.

Conference Call Information

Baidu's management will hold an earnings conference call at 8:15 PM on February 27, 2020, U.S. Eastern Time (9:15 AM on February 28, 2020, Beijing/Hong Kong Time). Dial-in details for the earnings conference call are as follows:

International:

+65 67135090

China                   

4006208038

US:

+1 8456750437

UK:

+44 2036214779

Hong Kong:

+852 30186771

   

Passcode for all regions:

1571908

A replay of the conference call may be accessed by phone at the following number until March 6, 2020:

International:

+61 2 8199 0299

Passcode:

1571908

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

About Baidu

Baidu, Inc. is a leading search engine, knowledge and information centered Internet platform and AI company. The Company's mission is to make a complicated world simpler through technology. Baidu's ADSs trade on the NASDAQ Global Select Market under the symbol "BIDU". Currently, ten ADSs represent one Class A ordinary share.

Contacts

Investors Relations, Baidu, Inc.
Tel: +86-10-5992-8888
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 first quarter of 2020, quotations from management in this announcement, as well as 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 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. 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 not only non-cash charges, but also other items that are infrequent or unusual 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 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 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, which is adjusted for accretion for the redeemable non-controlling interests, by the weighted average number of ordinary shares expressed in ADS. Adjusted EBITDA represents operating income excluding depreciation, amortization of intangible assets resulting from business combinations, and share-based compensation expenses. Free cash flow represents net cash provided by operating activities less capital expenditures.

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]

Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB 6.9618 to US$1.00, the exchange rate in effect as of December 31, 2019 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]

Excluding revenue from divested businesses, which was approximately RMB3.1 billion for the twelve-months ended December 31, 2018.

 

 

 

 

 

 

Baidu, Inc. 

Condensed Consolidated Balance Sheets

(In millions except for share information, unaudited)

   

December 31,

 

December 31,

 

December 31,

   

2018

 

2019

 

2019

   

RMB

 

RMB

 

USD

ASSETS

           

    Current assets:

           

 Cash and cash equivalents

 

27,638

 

33,443

 

4,804

 Restricted cash

 

2,189

 

996

 

143

 Short-term investments

 

111,626

 

112,924

 

16,221

 Accounts receivable, net

 

6,015

 

7,416

 

1,065

 Amounts due from related parties

 

785

 

1,594

 

229

 Other assets, current 

 

6,841

 

9,189

 

1,320

    Total current assets

 

155,094

 

165,562

 

23,782

             

    Non-current assets:

           

 Fixed assets, net

 

17,903

 

18,311

 

2,630

 Intangible assets, net

 

9,181

 

7,887

 

1,133

 Goodwill

 

18,536

 

18,250

 

2,621

 Long-term investments, net

 

80,454

 

69,410

 

9,970

 Amounts due from related parties

 

4,297

 

3,564

 

512

 Deferred tax assets, net

 

2,324

 

2,193

 

315

 Operating lease right-of-use assets

 

-

 

7,332

 

1,053

 Other assets, non-current 

 

9,777

 

8,807

 

1,264

    Total non-current assets

 

142,472

 

135,754

 

19,498

             

Total assets

 

297,566

 

301,316

 

43,280

             

LIABILITIES AND EQUITY

           

   Current liabilities:

           

      Short-term loans

 

3,046

 

2,618

 

376

Accounts payable and accrued liabilities

 

35,381

 

32,701

 

4,698

Customer deposits and deferred revenue

 

9,221

 

11,062

 

1,589

Deferred income

 

523

 

529

 

76

Long-term loans, current portion

 

84

 

737

 

106

Notes payable, current portion

 

6,871

 

5,219

 

750

Amounts due to related parties

 

1,727

 

2,231

 

320

Operating lease liabilities

 

-

 

2,283

 

328

    Total current liabilities

 

56,853

 

57,380

 

8,243

             

    Non-current liabilities:

           

Deferred income

 

54

 

17

 

2

Deferred revenue

 

1,309

 

1,009

 

145

Amounts due to related parties

 

4,360

 

3,846

 

552

Long-term loans

 

7,456

 

7,804

 

1,121

Notes payable

 

42,735

 

38,090

 

5,471

Convertible senior notes

 

4,712

 

12,297

 

1,766

Deferred tax liabilities

 

4,099

 

3,273

 

470

Operating lease liabilities

 

-

 

4,486

 

644

Other non-current liabilities

 

236

 

299

 

44

    Total non-current liabilities

 

64,961

 

71,121

 

10,215

             

Total liabilities

 

121,814

 

128,501

 

18,458

             

Redeemable noncontrolling interests

 

716

 

1,109

 

159

             

Equity

           

Class A Ordinary Shares, par value US$0.00005 per share, 825,000,000 shares authorized, and  27,733,692 shares and  27,381,621 shares issued and outstanding as at December 31, 2018 and  December 31, 2019

 

-

 

-

 

-

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, 2018 and December 31, 2019

 

-

 

-

 

-

Additional paid-in capital

 

33,441

 

38,714

 

5,561

Retained earnings

 

129,246

 

126,268

 

18,137

Accumulated other comprehensive income

 

210

 

(1,383)

 

(199)

    Total Baidu shareholders' equity

 

162,897

 

163,599

 

23,499

    Noncontrolling interests

 

12,139

 

8,107

 

1,164

Total equity

 

175,036

 

171,706

 

24,663

             

Total liabilities, redeemable noncontrolling interests, and equity

 

297,566

 

301,316

 

43,280

 

 

 

Baidu, Inc. 

Condensed Consolidated Statements of Income (Loss)

(In millions except for share, per share (or ADS) information, unaudited)

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

2018

 

2019

 

2019

 

2019

 

2018

 

2019

 

2019

 

RMB

 

RMB

 

RMB

 

USD

 

RMB

 

RMB

 

USD

 Revenues: 

                         

 Online marketing services 

21,197

 

20,434

 

20,765

 

2,983

 

81,912

 

78,093

 

11,217

 Others 

5,998

 

7,646

 

8,119

 

1,166

 

20,365

 

29,320

 

4,212

 Total revenues  

27,195

 

28,080

 

28,884

 

4,149

 

102,277

 

107,413

 

15,429

                 

 · 

 

 · 

   

 Operating costs and expenses: 

                         

     Cost of revenues(1)

15,611

 

16,378

 

15,517

 

2,229

 

51,744

 

62,850

 

9,028

     Selling, general and administrative(1)

5,943

 

4,657

 

3,956

 

568

 

19,231

 

19,910

 

2,860

     Research and development(1)

4,529

 

4,690

 

4,756

 

683

 

15,772

 

18,346

 

2,635

 Total operating costs and expenses 

26,083

 

25,725

 

24,229

 

3,480

 

86,747

 

101,106

 

14,523

 Operating income 

1,112

 

2,355

 

4,655

 

669

 

15,530

 

6,307

 

906

                           

 Other income (loss): 

                         

 Interest income 

1,490

 

1,687

 

2,096

 

301

 

4,451

 

6,060

 

870

 Interest expense 

(574)

 

(788)

 

(674)

 

(97)

 

(1,883)

 

(2,960)

 

(425)

 Foreign exchange income (loss), net 

(50)

 

29

 

35

 

5

 

(122)

 

(33)

 

(5)

 Loss from equity method investment 

(390)

 

(729)

 

(94)

 

(14)

 

(79)

 

(1,254)

 

(180)

 Other income (loss), net 

(536)

 

(9,683)

 

(664)

 

(94)

 

9,428

 

(8,460)

 

(1,215)

 Total other income (loss), net 

(60)

 

(9,484)

 

699

 

101

 

11,795

 

(6,647)

 

(955)

                           

 Income (loss) before income taxes 

1,052

 

(7,129)

 

5,354

 

770

 

27,325

 

(340)

 

(49)

 Income tax expense 

484

 

934

 

304

 

44

 

4,743

 

1,948

 

279

 Net income (loss) 

568

 

(8,063)

 

5,050

 

726

 

22,582

 

(2,288)

 

(328)

 Less: net income (loss) attributable to noncontrolling interests 

(1,513)

 

(1,690)

 

(1,295)

 

(185)

 

(4,991)

 

(4,345)

 

(624)

 Net income (loss) attributable to Baidu 

2,081

 

(6,373)

 

6,345

 

911

 

27,573

 

2,057

 

296

                           
                           

Earnings (loss) per ADS (1 Class A ordinary share equals 10 ADSs):

                         

 -Basic

5.96

 

(18.37)

 

18.28

 

2.63

 

78.64

 

5.68

 

0.82

 -Diluted

5.93

 

(18.37)

 

18.25

 

2.62

 

78.03

 

5.60

 

0.80

Earnings (loss) per share for Class A and Class B ordinary shares:

                         

 -Basic

59.55

 

(183.74)

 

182.82

 

26.26

 

786.36

 

56.84

 

8.16

 -Diluted

59.32

 

(183.74)

 

182.53

 

26.22

 

780.27

 

55.96

 

8.04

Weighted average number of Class A and Class B ordinary shares outstanding:

                       

Basic 

34,909,960

 

34,793,154

 

34,586,035

 

34,586,035

 

34,898,589

 

34,834,497

 

34,834,497

Diluted

35,044,338

 

34,793,154

 

34,613,834

 

34,613,834

 

35,171,043

 

34,884,854

 

34,884,854

                           

(1)  Includes share-based compensation expenses as follows:

 Cost of revenues 

71

 

70

 

92

 

13

 

224

 

327

 

47

 Selling, general and administrative 

587

 

336

 

413

 

60

 

1,725

 

1,768

 

254

 Research and development 

884

 

810

 

1,073

 

154

 

2,727

 

3,531

 

507

 Total share-based compensation expenses 

1,542

 

1,216

 

1,578

 

227

 

4,676

 

5,626

 

808

                           

(2)  All translations from RMB to U.S. dollars are made at a rate of RMB 6.9618 to US$1.00, the exchange rate in effect as of December 31, 2019 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System.

 

 

 

Baidu, Inc. 

Selected Information

(In millions except for per ADS information, unaudited)

 

Three months ended
December 31, 2018 (RMB)

 

Three months ended
September 30, 2019 (RMB)

 

Three months ended
December 31, 2019 (RMB)

 

Three months ended
December 31, 2019 (USD)

 

Baidu Core

iQIYI

Elim & adj(2)

 

Baidu, Inc.

 

Baidu Core

iQIYI

Elim & adj(2)

 

Baidu, Inc.

 

Baidu Core

iQIYI

Elim & adj(2)

 

Baidu, Inc.

 

Baidu Core

iQIYI

Elim & adj(2)

 

Baidu, Inc.

Total revenues 

20,520

7,028

(353)

 

27,195

 

21,010

7,397

(327)

 

28,080

 

21,711

7,497

(324)

 

28,884

 

3,119

1,077

(47)

 

4,149

  YOY

                       

6%

7%

   

6%

           

  QOQ

                       

3%

1%

   

3%

           
                                               

Operating costs and expenses: 

                                             

  Cost of revenues (1)

7,374

8,523

(286)

 

15,611

 

8,502

8,176

(300)

 

16,378

 

8,215

7,914

(612)

 

15,517

 

1,180

1,137

(88)

 

2,229

  Selling, general and administrative (1)

4,790

1,222

(69)

 

5,943

 

3,320

1,350

(13)

 

4,657

 

2,575

1,400

(19)

 

3,956

 

370

201

(3)

 

568

  Research and development (1)

3,923

608

(2)

 

4,529

 

3,997

703

(10)

 

4,690

 

4,051

711

(6)

 

4,756

 

582

102

(1)

 

683

Total operating costs and expenses 

16,087

10,353

(357)

 

26,083

 

15,819

10,229

(323)

 

25,725

 

14,841

10,025

(637)

 

24,229

 

2,132

1,440

(92)

 

3,480

  YOY

                       

(8%)

(3%)

   

(7%)

           

  Cost of revenues 

                       

11%

(7%)

   

(1%)

           

  Selling, general and administrative 

                       

(46%)

15%

   

(33%)

           

  Research and development 

                       

3%

17%

   

5%

           
                                               

Operating income (loss)

4,433

(3,325)

4

 

1,112

 

5,191

(2,832)

(4)

 

2,355

 

6,870

(2,528)

313

 

4,655

 

987

(363)

45

 

669

  YOY

                       

55%

(24%)

   

319%

           

  QOQ

                       

32%

(11%)

   

98%

           

Operating margin 

22%

(47%)

   

4%

 

25%

(38%)

   

8%

 

32%

(34%)

   

16%

           
                                               

  Add: total other income (loss),net

(30)

(35)

5

 

(60)

 

(8,657)

(827)

   

(9,484)

 

624

75

-

 

699

 

90

11

-

 

101

  Less: income tax expense

405

79

-

 

484

 

918

16

   

934

 

281

23

-

 

304

 

41

3

-

 

44

  Less: net income (loss) attributable to NCI

(52)

38

(1,499)

(3)

(1,513)

 

(97)

13

(1,606)

(3)

(1,690)

 

(220)

18

(1,093)

(3)

(1,295)

 

(32)

3

(156)

(3)

(185)

Net income(loss) attributable to Baidu

4,050

(3,477)

1,508

 

2,081

 

(4,287)

(3,688)

1,602

 

(6,373)

 

7,433

(2,494)

1,406

 

6,345

 

1,068

(358)

201

 

911

  YOY

                       

84%

(28%)

   

205%

           

  QOQ

                       

-

(32%)

   

-

           

Net margin 

20%

(49%)

   

8%

 

(20%)

(50%)

   

(23%)

 

34%

(33%)

   

22%

           
                                               

Other Key Metrics

                                             

Non-GAAP operating income (loss)

5,788

(3,045)

   

2,747

 

6,224

(2,529)

   

3,691

 

8,492

(2,052)

   

6,753

 

1,220

(295)

   

970

  YOY

                       

47%

(33%)

   

146%

           

  QOQ

                       

36%

(19%)

   

83%

           

Non-GAAP operating margin 

28%

(43%)

   

10%

 

30%

(34%)

   

13%

 

39%

(27%)

   

23%

           
                                               

Non-GAAP net income (loss) attributable to Baidu

6,513

(3,196)

   

4,703

 

6,310

(3,394)

   

4,387

 

9,950

(1,901)

   

9,193

 

1,429

(273)

   

1,320

  YOY

                       

53%

(41%)

   

95%

           

  QOQ

                       

58%

(44%)

   

110%

           

Non-GAAP net margin 

32%

(45%)

   

17%

 

30%

(46%)

   

16%

 

46%

(25%)

   

32%

           
                                               

Adjusted EBITDA

6,870

(2,952)

   

3,922

 

7,525

(2,405)

   

5,116

 

9,788

(1,926)

   

8,175

 

1,406

(277)

   

1,174

Adjusted EBITDA margin 

33%

(42%)

   

14%

 

36%

(33%)

   

18%

 

45%

(26%)

   

28%

           
                                               
                                               

(1)  Includes share-based compensation as follows:

 Cost of revenues 

43

28

   

71

 

25

45

   

70

 

43

49

   

92

 

6

7

   

13

 Selling, general and administrative 

435

152

   

587

 

207

129

   

336

 

220

193

   

413

 

32

28

   

60

 Research and development 

843

41

   

884

 

749

61

   

810

 

1,001

72

   

1,073

 

144

10

   

154

 Total share-based compensation 

1,321

221

   

1,542

 

981

235

   

1,216

 

1,264

314

   

1,578

 

182

45

   

227

 (2) Relates to intersegment eliminations and adjustments 

 (3) Relates to the net loss attributable to iQIYI noncontrolling interests 

 

 

 

Baidu, Inc. 

Selected Information

(In millions except for per ADS information, unaudited)

 

Twelve months ended
December 31, 2018 (RMB)

 

Twelve months ended
December 31, 2019 (RMB)

 

Twelve months ended
December 31, 2019 (USD)

 

Baidu Core

iQIYI

Elim & adj(3)

 

Baidu, Inc.

 

Baidu Core

iQIYI

Elim & adj(3)

 

Baidu, Inc.

 

Baidu Core

iQIYI

Elim & adj(3)

 

Baidu, Inc.

Total revenues 

78,271

24,989

(983)

 

102,277

 

79,711

28,994

(1,292)

 

107,413

 

11,450

4,165

(186)

 

15,429

  YOY

           

2%

16%

   

5%

           

  YOY excluding revenue from divested businesses(1)

           

2%

     

5%

           
                                   

Operating costs and expenses: 

                                 

  Cost of revenues (2)

25,370

27,133

(759)

 

51,744

 

34,019

30,348

(1,517)

 

62,850

 

4,887

4,359

(218)

 

9,028

  Selling, general and administrative (2)

15,310

4,168

(247)

 

19,231

 

14,733

5,237

(60)

 

19,910

 

2,116

753

(9)

 

2,860

  Research and development (2)

13,783

1,994

(5)

 

15,772

 

15,698

2,667

(19)

 

18,346

 

2,255

383

(3)

 

2,635

Total operating costs and expenses 

54,463

33,295

(1,011)

 

86,747

 

64,450

38,252

(1,596)

 

101,106

 

9,258

5,495

(230)

 

14,523

  YOY

           

18%

15%

   

17%

           

  Cost of revenues 

           

34%

12%

   

21%

           

  Selling, general and administrative 

           

(4%)

26%

   

4%

           

  Research and development 

           

14%

34%

   

16%

           
                                   

Operating income (loss)

23,808

(8,306)

28

 

15,530

 

15,261

(9,258)

304

 

6,307

 

2,192

(1,330)

44

 

906

  YOY

           

(36%)

11%

   

(59%)

           

Operating margin 

30%

(33%)

   

15%

 

19%

(32%)

   

6%

           
                                   

  Add: total other income (loss),net

13,169

(676)

(698)

 

11,795

 

(5,680)

(967)

-

 

(6,647)

 

(816)

(139)

-

 

(955)

  Less: income tax expense

4,664

79

-

 

4,743

 

1,896

52

-

 

1,948

 

272

7

-

 

279

  Less: net income (loss) attributable to NCI

(1,292)

49

(3,748)

(4)

(4,991)

 

105

46

(4,496)

(4)

(4,345)

 

15

7

(646)

(4)

(624)

Net income(loss) attributable to Baidu

33,605

(9,110)

3,078

 

27,573

 

7,580

(10,323)

4,800

 

2,057

 

1,089

(1,483)

690

 

296

  YOY

           

(77%)

13%

   

(93%)

           

Net margin 

43%

(36%)

   

27%

 

10%

(36%)

   

2%

           
                                   

Other Key Metrics

                                 

Non-GAAP operating income (loss)

28,020

(7,623)

   

20,425

 

20,311

(7,815)

   

12,800

 

2,917

(1,122)

   

1,839

  YOY

           

(28%)

3%

   

(37%)

           

Non-GAAP operating margin 

36%

(31%)

   

20%

 

25%

(27%)

   

12%

           
                                   

Non-GAAP net income (loss) attributable to Baidu

29,059

(8,599)

   

23,976

 

22,824

(8,765)

   

18,182

 

3,278

(1,258)

   

2,612

  YOY

           

(21%)

2%

   

(24%)

           

Non-GAAP net margin 

37%

(34%)

   

23%

 

29%

(30%)

   

17%

           
                                   

Adjusted EBITDA

31,438

(7,311)

   

24,155

 

25,451

(7,339)

   

18,416

 

3,655

(1,054)

   

2,646

Adjusted EBITDA margin 

40%

(29%)

   

24%

 

32%

(25%)

   

17%

           
                                   
                                   

(1)  Excluding revenue from divested businesses, which was approximately RMB3.1 billion for the twelve months ended December 31, 2018

(2)  Includes share-based compensation as follows:

 Cost of revenues 

141

83

   

224

 

156

171

   

327

 

22

25

   

47

 Selling, general and administrative 

1,356

369

   

1,725

 

1,092

676

   

1,768

 

157

97

   

254

 Research and development 

2,623

104

   

2,727

 

3,293

238

   

3,531

 

473

34

   

507

 Total share-based compensation 

4,120

556

   

4,676

 

4,541

1,085

   

5,626

 

652

156

   

808

 (3) Relates to intersegment eliminations and adjustments 

                                 

 (4) Relates to the net loss attributable to iQIYI noncontrolling interests 

 

 

 

Baidu, Inc. 

Condensed Consolidated Statements of Cash Flows

(In millions, unaudited)

 

Three months ended 

 

Three months ended 

 

Three months ended 

 

Three months ended 

 

December 31, 2018 (RMB)

 

 September 30, 2019 (RMB) 

 

 December 31, 2019 (RMB) 

 

December 31, 2019 (USD)

 

 Baidu excl. iQIYI

iQIYI

Baidu, Inc.

 

 Baidu excl. iQIYI

iQIYI

Baidu, Inc.

 

 Baidu excl. iQIYI

iQIYI

Baidu, Inc.

 

 Baidu excl. iQIYI

iQIYI

Baidu, Inc.

Net cash provided by operating activities

8,409

528

8,937

 

8,508

293

8,801

 

8,688

2,343

11,031

 

1,248

337

1,585

Net cash provided by (used in) investing activities 

(5,146)

(6,412)

(11,558)

 

(11,960)

(922)

(12,882)

 

10,194

(2,089)

8,105

 

1,464

(300)

1,164

Net cash provided by (used in) financing activities

10,084

6,923

17,007

 

(1,903)

(160)

(2,063)

 

(1,181)

(259)

(1,440)

 

(170)

(37)

(207)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(239)

(110)

(349)

 

122

258

380

 

(254)

(178)

(432)

 

(36)

(26)

(62)

Net increase (decrease) in cash, cash equivalents and restricted cash 

13,108

929

14,037

 

(5,233)

(531)

(5,764)

 

17,447

(183)

17,264

 

2,506

(26)

2,480

Cash, cash equivalents and restricted cash

                             

  At beginning of period

9,959

5,831

15,790

 

15,315

7,624

22,939

 

10,082

7,093

17,175

 

1,448

1,019

2,467

  At end of period

23,067

6,760

29,827

 

10,082

7,093

17,175

 

27,529

6,910

34,439

 

3,954

993

4,947

                               

Net cash provided operating activities

8,409

528

8,937

 

8,508

293

8,801

 

8,688

2,343

11,031

 

1,248

337

1,585

Less: Capital expenditures

(2,900)

(178)

(3,078)

 

(1,031)

(181)

(1,212)

 

(652)

(232)

(884)

 

(94)

(33)

(127)

Free cash flow

5,509

350

5,859

 

7,477

112

7,589

 

8,036

2,111

10,147

 

1,154

304

1,458

                               
                               
 

Twelve months ended 

 

Twelve months ended 

 

Twelve months ended 

       
 

December 31, 2018 (RMB)

 

 December 31, 2019 (RMB) 

 

December 31, 2019 (USD)

       
 

 Baidu excl. iQIYI

iQIYI

Baidu, Inc.

 

 Baidu excl. iQIYI

iQIYI

Baidu, Inc.

 

 Baidu excl. iQIYI

iQIYI

Baidu, Inc.

       

Net cash provided by operating activities

33,083

2,884

35,967

 

24,552

3,906

28,458

 

3,527

561

4,088

       

Net cash used in investing activities 

(13,511)

(20,949)

(34,460)

 

(8,225)

(11,749)

(19,974)

 

(1,181)

(1,688)

(2,869)

       

Net cash provided by (used in) financing activities