Form 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2023

Commission File Number: 000-51469

 

 

BAIDU, INC.

Baidu Campus

 

 

No. 10 Shangdi 10th Street

Haidian District, Beijing 100085

The People’s Republic of China

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒                    Form 40-F  ☐

 

 

 


Exhibit 99.1 — Press Release


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

BAIDU, INC.
By   :   

/s/ Rong Luo

Name   :    Rong Luo
Title   :    Chief Financial Officer

Date: November 21, 2023

EX-99.1

Exhibit 99.1

Baidu Announces Third Quarter 2023 Results

BEIJING, China, November 21, 2023 — Baidu, Inc. (NASDAQ: BIDU and HKEX: 9888 (HKD Counter) and 89888 (RMB Counter)), (“Baidu” or the “Company”), a leading AI company with strong Internet foundation, today announced its unaudited financial results for the third quarter ended September 30, 2023.

“Baidu reported solid third-quarter financial results, demonstrating resilience in a challenging economic climate,” said Robin Li, Co-founder and CEO of Baidu. “I am particularly pleased with our continuous technological enhancements and product improvements against the backdrop of emerging opportunities in generative AI and foundation models. Notably, we launched ERNIE 4.0, our most powerful foundation model. We have also harnessed the power of ERNIE and ERNIE Bot to reinvent our consumer-facing and enterprise-facing products, as well as our own operations, providing AI-native experiences and driving efficiency gains. Meanwhile, we’ve fully opened ERNIE API to cloud enterprises, empowering them to develop their own AI-native applications and solutions. Our AI-centric business and product strategy should set the stage for sustained multi-year revenue and profit expansion within our ERNIE and ERNIE Bot ecosystem.”

“Baidu Core maintained stable margins in the quarter,” said Rong Luo, CFO of Baidu. “Our ongoing investments in AI have underpinned technological and product innovations. Moving forward, while we will continue prioritizing investments in AI, especially in generative AI and foundation models, we will do so with an unrelenting focus on efficiency and strategic resource allocation.”

Third Quarter 2023 Financial Highlights1

 

     Baidu, Inc.  
(In millions except per ADS, unaudited)    Q3
2022
    Q2
2023
    Q3 2023     YOY     QOQ  
     RMB     RMB     RMB     US$              

Total revenues

     32,540       34,056       34,447       4,721       6     1

Operating income

     5,317       5,210       6,274       860       18     20

Operating income (non-GAAP)2

     7,200       7,334       7,596       1,041       6     4

Net (loss) income to Baidu

     (146     5,210       6,681       916       —         28

Net income to Baidu (non-GAAP)2

     5,889       7,998       7,267       996       23     (9 %) 

Diluted (loss) earnings per ADS

     (0.87     14.17       18.22       2.50       —         29

Diluted earnings per ADS (non-GAAP)2

     16.87       22.55       20.40       2.80       21     (10 %) 

Adjusted EBITDA2

     8,879       9,116       9,505       1,303       7     4

Adjusted EBITDA margin

     27     27     28     28    

 

 

1

Unless otherwise noted, RMB to USD was converted at an exchange rate of RMB7.2960 as of September 29, 2023, 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

Non-GAAP measures are defined in the Non-GAAP Financial Measures section (see also “Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures” for more details).

 

1


     Baidu Core  
(In millions, unaudited)    Q3
2022
    Q2
2023
    Q3 2023     YOY     QOQ  
                                      
     RMB     RMB     RMB     US$        

Total revenues

     25,239       26,407       26,572       3,642       5     1

Operating income

     4,982       4,568       5,498       754       10     20

Operating income (non-GAAP)2

     6,650       6,516       6,672       914       0     2

Net income to Baidu Core

     25       5,012       6,436       882       25,644     28

Net income to Baidu Core (non-GAAP)2

     5,767       7,694       6,956       953       21     (10 %) 

Adjusted EBITDA2

     8,239       8,229       8,513       1,167       3     3

Adjusted EBITDA margin

     33     31     32     32  

Operational Highlights

Corporate

 

   

Baidu launched ERNIE 4.0 (EB4) in October 2023. EB4 is now accessible to users on ERNIE Bot. In addition, enterprise customers can use EB4 via our cloud API.

 

   

Baidu returned US$126 million to shareholders since the beginning of Q3 2023, bringing the cumulative repurchase to US$351 million under the current share repurchase program.

 

   

Baidu established the Technology Ethics Committee in October 2023 to guide the practices of technology professionals.

Intelligent Driving

 

   

Apollo Go, Baidu’s autonomous ride-hailing service, provided 821K rides in the third quarter of 2023, up 73% year over year. As of September 30, 2023, the cumulative rides provided to the public by Apollo Go reached 4.1 million.

Mobile Ecosystem

 

   

In September 2023, Baidu App’s MAUs reached 663 million, up 5% year over year.

 

   

Managed Page accounted for 53% of Baidu Core’s online marketing revenue in the third quarter of 2023.

 

2


iQIYI

 

   

iQIYI’s average daily number of total subscribing members for the quarter was 107.5 million, compared to 101.0 million for the third quarter of 2022 and 111.2 million for the second quarter of 2023. More importantly, iQIYI’s monthly average revenue per membership (ARM3) for the quarter was RMB15.54, compared to RMB13.90 for the third quarter of 2022 and RMB14.82 for the second quarter of 2023, increasing 12% year over year.

Third Quarter 2023 Financial Results

Total revenues were RMB34.4 billion ($4.72 billion), increasing 6% year over year.

 

   

Revenue from Baidu Core was RMB26.6 billion ($3.64 billion), increasing 5% year over year; online marketing revenue was RMB19.7 billion ($2.70 billion), up 5% year over year, and non-online marketing revenue was RMB6.9 billion ($943 million), up 6% year over year.

 

   

Revenue from iQIYI was RMB8.0 billion ($1.10 billion), increasing 7% year over year.

Cost of revenues was RMB16.3 billion ($2.23 billion), which remained essentially unchanged compared to the same period last year.

Selling, general and administrative expenses were RMB5.8 billion ($792 million), increasing 11% year over year, primarily due to an increase in channel spending and promotional marketing expenses.

Research and development expenses were RMB6.1 billion ($836 million), increasing 6% year over year, primarily due to an increase in server depreciation expenses and server custody fees which support ERNIE Bot research inputs.

Operating income was RMB6.3 billion ($860 million). Baidu Core operating income was RMB5.5 billion ($754 million), and Baidu Core operating margin was 21%. Non-GAAP operating income was RMB7.6 billion ($1.04 billion). Non-GAAP Baidu Core operating income was RMB6.7 billion ($914 million), and non-GAAP Baidu Core operating margin was 25%.

Total other income, net was RMB1.9 billion ($261 million), compared to total other loss, net of RMB4.8 billion for the same period last year, mainly due to: (1) a recognition of RMB338 million gain versus RMB3.1 billion loss for the same period last year from fair value changes in long-term investments; and (2) a decrease in impairment of long-term investments by RMB1.4 billion.

Income tax expense was RMB1.3 billion ($175 million), increasing 41% year over year, primarily due to an increase in profit before tax.

 

 

3

The monthly ARM for the quarter is calculated by dividing iQIYI’s total revenues from membership services during a given quarter by the average daily number of total subscribing members for that quarter and the number of months in the quarter.

 

3


Net income attributable to Baidu was RMB6.7 billion ($916 million), and diluted earnings per ADS was RMB18.22 ($2.50). Net income attributable to Baidu Core was RMB6.4 billion ($882 million), and net margin for Baidu Core was 24%. Non-GAAP net income attributable to Baidu was RMB7.3 billion ($996 million). Non-GAAP diluted earnings per ADS was RMB20.40 ($2.80). Non-GAAP net income attributable to Baidu Core was RMB7.0 billion ($953 million), and non-GAAP net margin for Baidu Core was 26%.

Adjusted EBITDA was RMB9.5 billion ($1.30 billion) and adjusted EBITDA margin was 28%. Adjusted EBITDA for Baidu Core was RMB8.5 billion ($1.17 billion) and adjusted EBITDA margin for Baidu Core was 32%.

As of September 30, 2023, cash, cash equivalents, restricted cash and short-term investments were RMB202.7 billion ($27.78 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB197.4 billion ($27.06 billion). Free cash flow was RMB6.0 billion ($822 million), and free cash flow excluding iQIYI was RMB5.2 billion ($709 million).

Recent Development

Baidu has appointed Ms. Sandy Ran Xu as an independent director of the Board of Directors of the Company (the “Board”), effective from January 1, 2024.

Ms. Xu has served as CEO and executive director of JD.com since May 2023. Prior to her current role, Ms. Xu served as CFO of JD.com from June 2020 to May 2023. Prior to joining JD.com, Ms. Xu was an audit partner and spent nearly 20 years with PricewaterhouseCoopers Zhong Tian LLP, Beijing office and PricewaterhouseCoopers, San Jose office. Ms. Xu currently also serves as a director of Yonghui Supermarket Co., Ltd. Ms. Xu was a Certified Public Accountant in both China and the United States. Ms. Xu received her bachelor’s degree with a double major in information science and economics from Peking University.

Conference Call Information

Baidu’s management will hold an earnings conference call at 7.30 AM on November 21, 2023, U.S. Eastern Time (8.30 PM on November 21, 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 Q3 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/10034602-0jdhg4.html

 

4


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.

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, 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.

 

5


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, and contingent loss pertaining to legal proceeding in relation to former advertising agencies.

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, and contingent loss pertaining to legal proceeding in relation to former advertising agencies, 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 share, adjusted for related income tax effects, are also excluded.

 

6


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, share-based compensation expenses, and contingent loss pertaining to legal proceeding in relation to former advertising agencies.

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”.

 

7


Baidu, Inc.

Condensed Consolidated Statements of Income

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

 

     Three Months Ended  
     September 30,
2022
    June 30,
2023
    September 30,
2023
    September 30,
2023
 
     RMB     RMB     RMB     US$(2)  

Revenues:

  

Online marketing services

     19,943       21,081       21,346       2,926  

Others

     12,597       12,975       13,101       1,795  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     32,540       34,056       34,447       4,721  
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

        

Cost of revenues(1)

     16,273       16,167       16,294       2,233  

Selling, general and administrative(1)

     5,193       6,298       5,778       792  

Research and development(1)

     5,757       6,381       6,101       836  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     27,223       28,846       28,173       3,861  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     5,317       5,210       6,274       860  

Other (loss) income:

        

Interest income

     1,619       1,948       2,082       285  

Interest expense

     (724     (817     (853     (117

Foreign exchange (loss) gain, net

     (806     1,176       (26     (4

Share of losses from equity method investments

     (376     (383     (398     (55

Others, net

     (4,483     (555     1,100       152  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other (loss) income, net

     (4,770     1,369       1,905       261  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     547       6,579       8,179       1,121  

Income tax expense

     908       1,270       1,282       175  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

     (361     5,309       6,897       946  

Net (loss) income attributable to noncontrolling interests

     (215     99       216       30  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to Baidu

     (146     5,210       6,681       916  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

8


     Three Months Ended  
     September 30,
2022
    June 30,
2023
     September 30,
2023
     September 30,
2023
 
     RMB     RMB      RMB      US$(2)  

(Loss) earnings per ADS (1 ADS representing 8 Class A ordinary shares):

          

— Basic

     (0.87     14.34        18.45        2.53  

— Diluted

     (0.87     14.17        18.22        2.50  

(Loss) earnings per share for Class A and Class B ordinary shares:

          

— Basic

     (0.11     1.79        2.31        0.32  

— Diluted

     (0.11     1.77        2.28        0.31  

Weighted average number of Class A and Class B ordinary shares outstanding (in millions):

          

— Basic

     2,790       2,804        2,814        2,814  

— Diluted

     2,790       2,834        2,846        2,846  

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

    

Cost of revenues

     84       194        139        19  

Selling, general and administrative

     480       446        358        49  

Research and development

     1,039       1,403        778        108  
  

 

 

   

 

 

    

 

 

    

 

 

 

Total share-based compensation expenses

     1,603       2,043        1,275        176  

 

(2)

All translations from RMB to U.S. dollars are made at a rate of RMB7.2960 to US$1.00, the exchange rate in effect as of September 29, 2023 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System.

 

9


Baidu, Inc.

Condensed Consolidated Balance Sheets

(In millions, unaudited)

 

     December 31,
2022
     September 30,
2023
     September 30,
2023
 
     RMB      RMB      US$  

ASSETS

        

Current assets:

        

Cash and cash equivalents

     53,156        34,908        4,785  

Restricted cash

     11,330        11,392        1,561  

Short-term investments, net

     120,839        156,359        21,431  

Accounts receivable, net

     11,733        10,712        1,468  

Amounts due from related parties

     5,432        4,962        680  

Other current assets, net

     10,360        12,084        1,656  
  

 

 

    

 

 

    

 

 

 

Total current assets

     212,850        230,417        31,581  
  

 

 

    

 

 

    

 

 

 

Non-current assets:

        

Fixed assets, net

     23,973        26,481        3,630  

Licensed copyrights, net

     6,841        6,992        958  

Produced content, net

     13,002        12,626        1,731  

Intangible assets, net

     1,254        1,012        139  

Goodwill

     22,477        22,586        3,096  

Long-term investments, net

     55,297        52,553        7,203  

Long-term time deposits and held-to-maturity investments

     23,629        25,260        3,462  

Amounts due from related parties

     60        147        20  

Deferred tax assets, net

     2,129        1,783        244  

Operating lease right-of-use assets

     10,365        10,512        1,441  

Other non-current assets

     19,096        20,665        2,832  
  

 

 

    

 

 

    

 

 

 

Total non-current assets

     178,123        180,617        24,756  
  

 

 

    

 

 

    

 

 

 

Total assets

     390,973        411,034        56,337  
  

 

 

    

 

 

    

 

 

 

 

10


     December 31,
2022
     September 30,
2023
     September 30,
2023
 
     RMB      RMB      US$  

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

        

Current liabilities:

        

Short-term loans

     5,343        11,735        1,608  

Accounts payable and accrued liabilities

     38,014        37,184        5,096  

Customer deposits and deferred revenue

     13,116        15,043        2,062  

Deferred income

     72        151        21  

Long-term loans, current portion

     —          1        —    

Convertible senior notes, current portion

     8,305        3,114        427  

Notes payable, current portion

     6,904        6,179        847  

Amounts due to related parties

     5,067        5,241        718  

Operating lease liabilities

     2,809        2,953        405  
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     79,630        81,601        11,184  
  

 

 

    

 

 

    

 

 

 

Non-current liabilities:

        

Deferred income

     159        119        16  

Deferred revenue

     331        421        58  

Amounts due to related parties

     99        83        11  

Long-term loans

     13,722        14,472        1,984  

Notes payable

     39,893        35,861        4,915  

Convertible senior notes

     9,568        8,349        1,144  

Deferred tax liabilities

     2,898        2,750        377  

Operating lease liabilities

     4,810        4,830        662  

Other non-current liabilities

     2,058        1,838        253  
  

 

 

    

 

 

    

 

 

 

Total non-current liabilities

     73,538        68,723        9,420  
  

 

 

    

 

 

    

 

 

 

Total liabilities

     153,168        150,324        20,604  
  

 

 

    

 

 

    

 

 

 

Redeemable noncontrolling interests

     8,393        9,276        1,271  

Equity

        

Total Baidu shareholders’ equity

     223,478        242,427        33,227  

Noncontrolling interests

     5,934        9,007        1,235  
  

 

 

    

 

 

    

 

 

 

Total equity

     229,412        251,434        34,462  
  

 

 

    

 

 

    

 

 

 

Total liabilities, redeemable noncontrolling interests, and equity

     390,973        411,034        56,337  
  

 

 

    

 

 

    

 

 

 

 

11


Baidu, Inc.

Selected Information

(In millions, unaudited)

 

   

Three months ended

September 30, 2022 (RMB)

    Three months ended
June 30, 2023 (RMB)
    Three months ended
September 30, 2023 (RMB)
    Three months ended
September 30, 2023 (US$)
 
   

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

  25,239      7,471       (170     32,540       26,407       7,802       (153     34,056       26,572       8,015       (140     34,447       3,642       1,098       (19     4,721  

YOY

                     5     7       6        

QOQ

                     1     3       1        

Costs and expenses: Cost of revenues(1)

  10,745      5,705       (177     16,273       10,553       5,774       (160     16,167       10,610       5,840       (156     16,294       1,454       800       (21     2,233  

Selling, general and

administrative(1)

  4,231      980       (18     5,193       5,344       979       (25     6,298       4,810       981       (13     5,778       659       135       (2     792  

Research and development(1)

  5,281      476       —         5,757       5,942       439       —         6,381       5,654       447       —         6,101       775       61       —         836  
 

 

  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

  20,257      7,161       (195     27,223       21,839       7,192       (185     28,846       21,074       7,268       (169     28,173       2,888       996       (23     3,861  
 

 

  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

YOY

                                

Cost of revenues

                     (1 %)      2       0        

Selling, general and administrative

                     14     0       11        

Research and development

                     7     (6 %)        6        

Costs and expenses

                     4     1       3        

Operating income

  4,982      310       25       5,317       4,568       610       32       5,210       5,498       747       29       6,274       754       102       4       860  

YOY

                     10     141       18        

QOQ

                     20     22       20        

Operating margin

  20%      4       16     17     8       15     21     9       18        

Add: total other

                                

(loss) income, net

  (4,108)      (662     —         (4,770     1,603       (234     —         1,369       2,159       (254     —         1,905       296       (35     —         261  

Less: income tax expense

  866      42       —         908       1,262       8       —         1,270       1,272       10       —         1,282       174       1       —         175  

Less: net (loss) income attributable to NCI

  (17)      1       (199 )(3)      (215     (103     3       199 (3)      99       (51     7       260 (3)      216       (6     1       35 (3)      30  
 

 

  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Baidu

  25      (395     224       (146     5,012       365       (167     5,210       6,436       476       (231     6,681       882       65       (31     916  
 

 

  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

YOY

                     25,644     —           —            

QOQ

                     28     30       28        

Net margin

  0%      (5 %)        (0 %)      19     5       15     24     6       19        

 

12


   

Three months ended

September 30, 2022 (RMB)

    Three months ended
June 30, 2023 (RMB)
    Three months ended
September 30, 2023 (RMB)
    Three months ended
September 30, 2023 (US$)
 
   

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.
 

Non-GAAP financial measures:

                                      

Operating income (non-GAAP)

  6,650      525          7,200       6,516       786          7,334       6,672       895          7,596       914        123           1,041  

YOY

                       0     70        6           

QOQ

                       2     14        4           

Operating margin (non-GAAP)

  26%      7        22     25     10        22     25     11        22           

Net income attributable to Baidu (non-GAAP)

  5,767      187          5,889       7,694       595          7,998       6,956       622          7,267       953        85           996  

YOY

                       21     233        23           

QOQ

                       (10 %)      5        (9 %)            

Net margin (non-GAAP)

  23%      3        18     29     8        23     26     8        21           

Adjusted EBITDA

  8,239      615          8,879       8,229       855          9,116       8,513       963          9,505       1,167        132           1,303  

YOY

                       3     57        7           

QOQ

                       3     13        4           

Adjusted EBITDA margin

  33%      8        27     31     11        27     32     12        28           

(1)   Includes share-based compensation as follows:

    

Cost of revenues

  45      39          84       160       34          194       107       32          139       15        4           19  

Selling general and administrative

  375      105          480       356       90          446       290       68          358       40        9           49  

Research and development

  978      61          1,039       1,358       45          1,403       732       46          778       100        8           108  
 

 

  

 

 

      

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

      

 

 

   

 

 

    

 

 

       

 

 

 

Total share-based compensation

  1,398      205          1,603       1,874       169          2,043       1,129       146          1,275       155        21           176  

 

(2)

Relates to intersegment eliminations and adjustments

(3)

Relates to the net income/(loss) attributable to iQIYI noncontrolling interests

 

13


Baidu, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions, unaudited)

 

     Three months ended     Three months ended     Three months ended     Three months ended  
     September 30, 2022     June 30, 2023     September 30, 2023     September 30, 2023  
     (RMB)     (RMB)     (RMB)     (US$)  
     Baidu                 Baidu                 Baidu                 Baidu              
     excl.           Baidu,     excl.           Baidu,     excl.           Baidu,     excl.           Baidu,  
     iQIYI     iQIYI     Inc.     iQIYI     iQIYI     Inc.     iQIYI     iQIYI     Inc.     iQIYI     iQIYI     Inc.  

Net cash provided by operating activities

     8,543       196       8,739       9,746       886       10,632       8,694       831       9,525       1,192       114       1,306  

Net cash provided by (used in) investing activities

     7,603       407       8,010       7,309       (421     6,888       (11,345     (55     (11,400     (1,555     (8     (1,563

Net cash (used in) provided by financing activities

     (5,967     (106     (6,073     1,908       (1,176     732       (5,253     269       (4,984     (720     37       (683

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

     1,980       60       2,040       496       128       624       153       5       158       21       1       22  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     12,159       557       12,716       19,459       (583 )      18,876       (7,751 )      1,050       (6,701 )      (1,062 )      144       (918 ) 

Cash, cash equivalents and restricted cash At beginning of period

     50,662       3,019       53,681       30,355       5,665       36,020       49,814       5,082       54,896       6,828       697       7,525  

At end of period

     62,821       3,576       66,397       49,814       5,082       54,896       42,063       6,132       48,195       5,766       841       6,607  

Net cash provided by operating activities

     8,543       196       8,739       9,746       886       10,632       8,694       831       9,525       1,192       114       1,306  

Less: Capital expenditures

     (2,140     (48     (2,188     (2,693     (13     (2,706     (3,525     (4     (3,529     (483     (1     (484
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

     6,403       148       6,551       7,053       873       7,926       5,169       827       5,996       709       113       822  

Note: Baidu excl. iQIYI represents Baidu, Inc. minus iQIYI’s consolidated cash flows.

 

14


Baidu, Inc.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

(In millions except for per ADS information, unaudited)

 

     Three months ended     Three months ended     Three months ended     Three months ended  
     September 30, 2022     June 30, 2023     September 30, 2023     September 30, 2023  
     (RMB)     (RMB)     (RMB)     (US$)  
     Baidu           Baidu,     Baidu           Baidu,     Baidu           Baidu,     Baidu            Baidu,  
     Core     iQIYI     Inc.     Core     iQIYI     Inc.     Core     iQIYI     Inc.     Core     iQIYI      Inc.  

Operating income

     4,982       310       5,317       4,568       610       5,210       5,498       747       6,274       754       102        860  

Add: Share-based compensation expenses

     1,398       205       1,603       1,874       169       2,043       1,129       146       1,275       155       21        176  

Add: Amortization and impairment of intangible assets(1)

     56       10       66       74       7       81       45       2       47       5       —          5  

Add: Contingent loss(4)

     214       —         214       —         —         —         —         —         —         —         —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Operating income (non-GAAP)

     6,650       525       7,200       6,516       786       7,334       6,672       895       7,596       914       123        1,041  

Add: Depreciation of fixed assets

     1,589       90       1,679       1,713       69       1,782       1,841       68       1,909       253       9        262  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Adjusted EBITDA

     8,239       615       8,879       8,229       855       9,116       8,513       963       9,505       1,167       132        1,303  

Net income (loss) attributable to Baidu

     25       (395 )      (146 )      5,012       365       5,210       6,436       476       6,681       882       65        916  

Add: Share-based compensation expenses

     1,394       205       1,497       1,872       169       1,949       1,128       146       1,194       155       20        164  

Add: Amortization and impairment of intangible assets(1)

     50       10       56       61       7       65       43       2       44       6       —          6  

Add: Disposal (gain)

     (6     —         (6     (919     (89     (959     (753     —         (753     (103     —          (103

Add: Impairment of long-term investments

     1,042       376       1,230       270       155       340       46       —         46       6       —          6  

Add: Fair value loss (gain) of long-term investments

     3,149       (27     3,135       1,239       (4     1,237       (384     (2     (385     (53     —          (53

Add: Reconciling items on equity method investments(2)

     237       16       245       296       (9     292       572       —         572       78       —          78  

Add: Contingent loss(4)

     214       —         214       —         —         —         —         —         —         —         —          —    

Add: Tax effects on non-GAAP adjustments(3)

     (338     2       (336     (137     1       (136     (132     —         (132     (18     —          (18
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net income attributable to Baidu (non-GAAP)

     5,767       187       5,889       7,694       595       7,998       6,956       622       7,267       953       85        996  

 

15


     Three months ended     Three months ended      Three months ended      Three months ended  
     September 30, 2022     June 30, 2023      September 30, 2023      September 30, 2023  
     (RMB)     (RMB)      (RMB)      (US$)  
     Baidu         Baidu,     Baidu             Baidu,      Baidu             Baidu,      Baidu             Baidu,  
     Core    iQIYI    Inc.     Core      iQIYI      Inc.      Core      iQIYI      Inc.      Core      iQIYI      Inc.  

Diluted earnings per ADS

           (0.87           14.17              18.22              2.50  

Add: Accretion of the redeemable noncontrolling interests

           0.45             0.50              0.53              0.07  

Add: Non-GAAP adjustments to earnings per ADS

           17.29             7.88              1.65              0.23  
        

 

 

         

 

 

          

 

 

          

 

 

 

Diluted earnings per ADS (non-GAAP)

           16.87             22.55              20.40              2.80  

 

(1)

This represents amortization and impairment of intangible assets resulting from business combinations.

(2)

This represents Baidu’s share of equity method investments for other non-GAAP reconciling items, amortization and impairment of intangible assets not on the investee’s books, accretion of their redeemable noncontrolling 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 share.

(3)

This represents tax impact of all non-GAAP adjustments.

(4)

This represents contingent loss pertaining to legal proceeding involving former advertising agency.

 

16