Baidu Announces Fourth Quarter and Fiscal Year 2022 Results

BEIJING, Feb. 22, 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 quarter and fiscal year ended December 31, 2022.

"2022 was a challenging year, but we used this period to prepare the company for better times. In 2023, we believe we have a clear path to reaccelerate our revenue growth, and we are now well positioned to make use of the opportunities that China's economic recovery offers us," said Robin Li, Co-founder and CEO of Baidu. "With our long-term investments in AI, we are poised to capitalize on the imminent inflection point in AI, unlocking exciting new opportunities across our entire business portfolio - from mobile ecosystem to AI Cloud, autonomous driving, smart devices, and beyond."

"We initiated our efforts towards cost optimization and business efficiency at an early stage in the pandemic, creating a stronger, leaner company. In the second half of 2022, Baidu Core non-GAAP operating profit grew 14% year over year. We believe a more streamlined operation will support the sustainable development of our company over the long term," said Rong Luo, CFO of Baidu.

Fourth Quarter and Fiscal Year 2022 Financial Highlights^[1]

Operational Highlights

Corporate

• Baidu's board of directors has authorized a new share repurchase program under which the Company may repurchase up to US$5 billion of its shares, effective through December 31, 2025.
• Baidu received a B rating at the latest CDP climate change scores, making a significant improvement from its D rating in 2021. CDP is a non-profit organization that runs the global disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts.

AI Cloud

• Baidu ACE smart transportation has been adopted by 69 cities, up from 35 cities a year ago, based on contract amounts of over RMB10 million, as of the end of 2022.
• Baidu was once again ranked the No. 1 AI Cloud provider, according to IDC's first half of 2022 report on China's public cloud market for the fourth consecutive year.
• PaddlePaddle developer community has grown to 5.35 million and has served 200,000 businesses, as of the end of 2022. Developers have created 670,000 models on PaddlePaddle by the end of 2022.

Intelligent Driving

• Apollo Go, Baidu's autonomous ride-hailing service, provided 561K rides in the fourth quarter of 2022, up 162% year over year. The cumulative rides provided to the public by Apollo Go exceeded 2 million by the end of January 2023.
• Apollo Go received Beijing's first license to test vehicles with no driver or safety operator in the car on December 30, 2022, taking Baidu one step closer to providing fully driverless ride-hailing service on public roads in the capital city.

Other Growth Initiatives

• Xiaodu ranked No.1 in smart display shipments and smart speaker shipments in China for the first nine months of 2022, according to IDC, Strategy Analytics, and Canalys.

Mobile Ecosystem

• In December, Baidu App's MAUs reached 648 million, up 4% year over year.
• Managed Page accounted for 45% of Baidu Core's online marketing revenue in the fourth quarter of 2022. In 2022, revenues from Managed Page accounted for 48% of total online marketing revenue, up from about 40% a year ago.

iQIYI

• iQIYI's average daily number of total subscribing members for the quarter was 111.6 million, compared to 97.0 million for the fourth quarter of 2021 and 101.0 million for the third quarter of 2022.

Fourth Quarter 2022 Financial Results

Total revenues were RMB 33.1 billion ($4.80 billion), which is basically flat from last year.

• Revenue from Baidu Core was RMB 25.7 billion ($3.72 billion), decreasing 1% year over year; online marketing revenue was RMB 18.1 billion ($2.62 billion), down 6% year over year primarily due to the resurgence of Covid-19 in certain cities in China, and non-online marketing revenue was RMB 7.6 billion ($1.10 billion), up 11% year over year, mainly driven by other AI-powered businesses and cloud business.
• Revenue from iQIYI was RMB 7.6 billion ($1.10 billion), increasing 3% year over year.

Cost of revenues was RMB 16.9 billion ($2.46 billion), decreasing 2% year over year, primarily due to the reduction in content costs, cost of goods sold and other costs related to new AI business, partially offset by the increase in traffic acquisition costs.

Selling, general and administrative expenses were RMB 5.9 billion ($853 million), decreasing 9% year over year, primarily due to the decrease in personnel-related expenses.

Research and development expense was RMB 5.7 billion ($820 million), decreasing 23% year over year, primarily due to the decrease in personnel-related expense.

Operating income was RMB 4.6 billion ($666 million). Baidu Core operating income was RMB 3.8 billion ($548 million), and Baidu Core operating margin was 15%. Non-GAAP operating income was RMB 6.5 billion ($942 million). Non-GAAP Baidu Core operating income was RMB 5.5 billion ($796 million), and non-GAAP Baidu Core operating margin was 21%.

Total other income, net was RMB 1.8 billion ($258 million), which mainly included a fair value gain of RMB 1.6 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 and private equity funds, is subject to quarterly fair value adjustments, which may contribute to net income volatility in future periods. Total other income, net was RMB 407 million for the same period last year, which mainly included a fair value gain of RMB 1.5 billion and an impairment loss of RMB 891 million from long-term investments.

Income tax expense was RMB 1.3 billion ($181 million), decreasing 3% year over year.

Net income attributable to Baidu was RMB 5.0 billion ($718 million), and diluted earnings per ADS was RMB 13.59 ($1.97). Net income attributable to Baidu Core was RMB 4.8 billion ($692 million), and net margin for Baidu Core was 19%. Non-GAAP net income attributable to Baidu was RMB 5.4 billion ($779 million). Non-GAAP diluted earnings per ADS was RMB 15.25 ($2.21). Non-GAAP net income attributable to Baidu Core was RMB 4.9 billion ($713 million), and non-GAAP net margin for Baidu Core was 19%.

Adjusted EBITDA was RMB 8.2 billion ($1.19 billion) and adjusted EBITDA margin was 25%. Adjusted EBITDA for Baidu Core was RMB 7.1 billion ($1.04 billion) and adjusted EBITDA margin for Baidu Core was 28%. 

As of December 31, 2022, cash, cash equivalents, restricted cash and short-term investments were RMB 185.3 billion ($26.87 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB 177.4 billion ($25.72 billion). Free cash flow was RMB 5.9 billion ($859 million), and free cash flow excluding iQIYI was RMB 5.1 billion ($736 million).

Fiscal Year 2022 Results

Total revenues were RMB 123.7 billion ($17.93 billion), decreasing 1% year over year.

• Revenue from Baidu Core was RMB 95.4 billion ($13.84 billion), which is basically flat from last year; online marketing revenue was RMB 69.5 billion ($10.08 billion), decreasing 6% year over year, and non-online marketing revenue was RMB 25.9 billion ($3.76 billion), up 22% year over year, mainly driven by cloud and other AI-powered businesses.
• Revenue from iQIYI was RMB 29.0 billion ($4.20 billion), decreasing 5% year over year.

Cost of revenues was RMB 63.9 billion ($9.27 billion), decreasing 1% year over year, which is basically flat from last year, primarily due to the increase in traffic acquisition costs, bandwidth costs, cost of goods sold and other costs related to new AI business, offset by the decrease in content costs.

Selling, general and administrative expenses were RMB 20.5 billion ($2.98 billion), decreasing 17% year over year, primarily due to the decrease in channel spending, promotional marketing and personnel-related expenses.

Research and development expenses were RMB 23.3 billion ($3.38 billion), decreasing 7% year over year, primarily due to the decrease in personnel-related expenses.

Operating income was RMB 15.9 billion ($2.31 billion). Baidu Core operating income was RMB 14.5 billion ($2.11 billion), and Baidu Core operating margin was 15%. Non-GAAP operating income was RMB 23.2 billion ($3.36 billion). Non-GAAP Baidu Core operating income was RMB 20.9 billion ($3.04 billion), and non-GAAP Baidu Core operating margin was 22%.

Total other loss, net was RMB 5.8 billion ($841 million), which mainly included a fair value loss of RMB 3.9 billion and an impairment 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 and private equity funds, is subject to quarterly fair value adjustments, which may contribute to net income volatility in future periods. Total other income, net was RMB 260 million for 2021, which mainly included a fair value gain of RMB 3.1 billion and an impairment loss of RMB 4.3 billion from long-term investments.

Income tax expense was RMB 2.6 billion ($374 million), decreasing 19% year over year, primarily due to deferred tax benefit recognized on fair value loss of long-term investments in 2022 whereas the Company had deferred tax expense recognized on fair value gain of long-term investments in 2021.

Net income attributable to Baidu was RMB 7.6 billion ($1.10 billion), and diluted earnings per ADS was RMB 19.85 ($2.88). Net income attributable to Baidu Core was RMB 7.6 billion ($1.10 billion), and net margin for Baidu Core was 8%. Non-GAAP net income attributable to Baidu was RMB 20.7 billion ($3.00 billion), and non-GAAP diluted earnings per ADS amounted to RMB 58.93 ($8.54). Non-GAAP net income attributable to Baidu Core was RMB 19.9 billion ($2.89 billion), and non-GAAP net margin for Baidu Core was 21%.

Adjusted EBITDA was RMB 29.7 billion ($4.30 billion) and adjusted EBITDA margin was 24%. Adjusted EBITDA to Baidu Core was RMB 27.1 billion ($3.93 billion) and adjusted EBITDA margin for Baidu Core was 28%. 

Free cash flow was RMB 17.9 billion ($2.59 billion), and free cash flow excluding iQIYI was RMB 18.1 billion ($2.63 billion).

Conference Call Information

Baidu's management will hold an earnings conference call at 7.30AM on February 22, 2023, U.S. Eastern Time (8.30PM on February 22, 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. Q4 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 click
https://s1.c-conf.com/diamondpass/10028709-re5fs4.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, non-GAAP operating margin, non-GAAP net income 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 and contingent loss pertaining to legal proceeding in relation to former advertising agencies and iQIYI's non-recurring employee severance costs.

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, contingent loss pertaining to legal proceeding in relation to former advertising agencies, iQIYI's non-recurring employee severance costs, disposal gain or loss, impairment of long-term investments, fair value change of long-term investments, charitable donation from Baidu, 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, contingent loss pertaining to legal proceeding in relation to former advertising agencies, iQIYI's non-recurring employee severance costs, 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.