We historically had only one single reportable segment because our chief operating decision maker, or CODM, formerly relied on
the consolidated results of operations when making decisions on allocating our resources and assessing our performance. Beginning in the quarter ended June 30, 2015, we have changed our reportable segments as a result of significant growth in
our operations and expansion of services to multiple businesses in recent years. Our chief executive officer, who has been identified as the CODM, reviews the operating results of different service lines in order to allocate resources and
assess our performance. Accordingly, the financial statements include segment information which reflects the current composition of the reportable segments in accordance with ASC topic 280, or ASC 280, Segment Reporting.
We have reorganized our operation into three segments since the second quarter of 2015, consisting of the Search Services,
Transaction Services and iQiyi. Search Services mainly include our P4P services and other online marketing services. Transaction Services include Baidu Nuomi, Baidu Deliveries, Baidu Mobile Game, Baidu Wallet, Baidu Maps and others. iQiyi is an
online video platform with a content library that includes licensed movies, television series, cartoons, variety shows and other programs. We do not allocate any share-based compensation expenses to these segments as the CODM does not use this
information to measure the performance of the operating segments.
We recognize revenues based on the following principles:
Performance-based online marketing services
Cost-per-click. Our auction-based P4P
platform enables a customer to place its website link and related description on our search result list on the website which could be accessed through personal computers or mobile devices. Customers make bids on keywords based on how much they are
willing to pay for each click to their listings in the search results listed on our website and the relevance between the keywords and the customers businesses. Internet users search of the keyword will trigger the display of the
listings. The ranking of the customers listing depends on both the bidding price and the listings relevance to the keyword searched. Customer pays us only when a user clicks on one of its website links. Other than the auction-based P4P
platform, we have certain vertical platforms from which we generate revenue through pre-determined prices per click. Revenue is recognized when a user clicks on one of the customer-sponsored website links, as
there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection is reasonably assured, as prescribed by ASC topic 605, or ASC 605, Revenue Recognition.
Other performance-based online marketing services. To the extent we provide online marketing services based
on performance criteria other than cost-per-click, such as the number of downloads (and user registration) of mobile applications, the number of incremental end users
and the total incremental revenue generated, revenue is recognized when the specified performance criteria are met together with satisfaction of other applicable revenue recognition criteria as prescribed by ASC 605.
Display-based online advertising services
For display-based online advertising services such as text links, banners, icons or other forms of graphical advertisements in
the websites or mobile applications, we recognize revenue, in accordance with ASC 605, on a pro-rata basis over the contractual term for cost per time advertising arrangements commencing on the date the
customers advertisement is displayed on a specified webpage or mobile applications, or on the number of times that the advertisement has been displayed for cost per thousand impressions advertising arrangements. For certain display-based
contractual agreements, we may also provide certain performance guarantees, in which cases revenue is recognized at the later of the completion of the time commitment or performance guarantee.