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    Baidu Announces First Quarter 2019 Results

    May 16, 2019

    BEIJING, May 16, 2019 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU) ("Baidu" or the "Company"), the leading Chinese language Internet search provider, today announced its unaudited financial results for the first quarter ended March 31, 2019[1].

    "Baidu's mobile foundation continues to strengthen with search-powered AI, and our new AI businesses are making strong progress. In March, Baidu's mobile reach expanded to 1.1 billion monthly active devices, while DuerOS voice assistant installed base reached 275 million devices and generated 2.37 billion monthly voice queries. We are leveraging Baidu AI to provide enterprise solutions to businesses and local governments, which significantly expands our total addressable market," said Robin Li, Chairman and CEO of Baidu. "Looking ahead, we are quite excited about the opportunities to significantly improve content and service discovery through in-app search and increase customer ROI with our entrance into CRM, to deepen our offering to our marketing customers."

    "Baidu Q1 results were solid, with revenues reaching RMB 24.1 billion, up 15% year over year, or 21% year over year, excluding revenue from divested business, and margins were dampened by our successful CCTV New Year Eve Gala marketing campaign, which accelerated the traffic of Baidu family of apps and highlighted better in-app search user experience." said Herman Yu, CFO of Baidu. "Despite government policies to improve the market condition for SMEs, we anticipate online marketing in the near term to face a challenging environment. We will take this opportunity to improve our monetization capabilities and review our businesses for operational efficiency, while recognizing the importance to invest for sustainable long-term growth."

    First Quarter 2019 Financial Highlights

    (in millions, except for per ADS information, unaudited)

     
     

    Consolidated

     
     

    For the three-month ended March 31,

     

    2018

     

    2019

     

    YOY

     

    YOY[2]

     

    2019

     
     

    RMB

     

    RMB

     
     
     
     
     

    USD

    Total revenues 

     

    20,907

     

    24,123

     

    15%

     

    21%

     

    3,594

     
     
     
     
     
     
     
     
     
     
     

    Operating income (loss)

     

    4,568

     

    (936)

     

    (120%)

     
     
     

    (139)

    Operating margin

     

    22%

     

    (4%)

     
     
     
     
     

    (4%)

    Non-GAAP operating income[3]

     

    5,371

     

    401

     

    (93%)

     
     
     

    60

    Non-GAAP operating margin

     

    26%

     

    2%

     
     
     
     
     

    2%

     
     
     
     
     
     
     
     
     
     
     

    Net income (loss) attributable to Baidu

     

    6,694

     

    (327)

     

    (105%)

     
     
     

    (49)

    Net margin

     

    32%

     

    (1%)

     
     
     
     
     

    (1%)

    Non-GAAP net income attributable to Baidu

     

    4,817

     

    967

     

    (80%)

     
     
     

    144

    Non-GAAP net margin

     

    23%

     

    4%

     
     
     
     
     

    4%

     
     
     
     
     
     
     
     
     
     
     

    Diluted earnings (loss) per ADS

     

    18.68

     

    (0.98)

     

    (105%)

     
     
     

    (0.15)

    Non-GAAP diluted earnings per ADS

     

    13.69

     

    2.77

     

    (80%)

     
     
     

    0.41

    Management Change

    Hailong Xiang, senior vice president of the search business, has tendered his resignation, and the Company has accepted Hailong's resignation and thanks him for fourteen years of service at Baidu.

    The Company has promoted Dou Shen to senior vice president, overseeing Baidu's mobile business, previously known as the search business. Previously, Dou served as vice president of Baidu's mobile products, overseeing the development of Baidu App, Haokan short video app and Baidu smart mini program. Dou has served in various other roles at Baidu since joining in 2012, including web search, display advertising and the financial services group. Prior to Baidu, Dou worked in the adCenter group at Microsoft and sold Buzzlabs, a social media monitoring and analysis platform company that he co-founded, to IAC-owned CityGrid Media. Dou received a bachelor's degree in engineering from North China Electric Power University, a master's degree in engineering from Tsinghua University, and a Ph.D. in computer science from the Hong Kong University of Science and Technology.

    Other Highlights

    Corporate

  • The Company's board of directors has authorized a new share repurchase program, under which the Company may repurchase up to US$1 billion of its shares, effective until July 1, 2020.
  • Baidu ranked 8th place on BrandZ's 2019 Top 100 Most Valuable Chinese Brands Chart and has been ranked in the Top 10 Most Valuable Chinese Brands for nine consecutive years.
  • The Company released its biannual Corporate Social Responsibility Report in April 2019, which summarizes Baidu's efforts in environment, social responsibility and corporate governance. The report can be downloaded from http://csr.baidu.com/download.html.
  • Search and Feed

  • Baidu App daily active users ("DAUs") in March 2019 reached 174 million, growing 28% year over year.
  • Haokan DAUs in March 2019 reached 22 million, growing 768% year over year and 16% sequentially.
  • Baidu continues to expand its content ecosystem to provide users with native-app like experience for search and feed: 1) Baijiahao ("BJH accounts"), Baidu feed's content network, grew to 2.1 million publisher accounts in March 2019, and 2) Baidu Smart Mini Program, launched in July 2018, saw its monthly active users ("MAUs") in March 2019 reach 181 million, growing 23% sequentially.
  • Baidu connected 1.5 million out-of-home digital screens in 362 cities across 31 provinces to its ad partner network in March 2019, leveraging its technology and online advertising expertise to equip brands with broader reach and more options to deliver omni-marketing campaigns.
  • DuerOS

  • DuerOS voice assistant installed base reached 275 million, increasing 279% year over year, and monthly voice queries on DuerOS reached 2.37 billion, increasing 817% year over year in March 2019.
  • DuerOS skills store continues to push the boundary on improving user experience with over 1,100 skills in wide-ranging genres, including iQIYI, (long-form video), Huya (live video), Haokan (short video), Digital Pets (gaming), 51Talk (online education) and Tencent News Audio Edition (news).
  • Recently released first-party DuerOS smart devices include: 1) Xiaodu Smart Display 1S (MSRP US$49); 2) Xiaodu TV Sound Bar (MSRP US$119), which doubles as a home theater system and high definition OTT TV box; and 3) Xiaodu Smart Speaker 1S (MSRP US$22), which comes equipped with DuerOS-powered universal remote control, capable of connecting to household appliances, including air conditioners, televisions and OTT TV boxes from Samsung, Panasonic and Haier.
  • Chery Automobile EXEED sedans were released in April 2019, equipped with DuerOS for Apollo in-vehicle infotainment system. DuerOS for Apollo has received very positive initial user feedback.
  • Over 190 Baidu Smart Mini Programs and DuerOS skills are now available in the skills store of DuerOS for Apollo, including iQIYI (online video), E Designated Driving (driving services) and GeekPark (technology news). Leveraging Baidu Cloud, Baidu aims to enable app developers to provide their services on mobile, smart devices and automobile infotainment systems.
  • Apollo

  • In March 2019, Baidu began testing China's first robotaxi fleet powered by Apollo in Changsha, the capital of Hunan province, to help improve traffic congestion, air pollution and road safety.
  • Apollo Open Platform, embraced by a developer community of 15,000, has been adopted for many innovative auto pilot scenarios, including street cleaning, goods delivery and shuttle services.
  • According to the inaugural Beijing Autonomous Vehicles Road Test Report for 2018 issued by the Beijing Municipal Commission of Transport, Apollo amassed over 10 times the test miles of the next industry player in China.
  • Cloud & Others

  • Baidu Cloud held its ABC Internet Summit in April 2019, introducing a library of AI toolkits for Baidu Cloud to empower content producers to better create, edit and analyze video content.
  • According to the 2H18 IDC China Public Cloud Report, Baidu Cloud, for the first time, entered the top 5 ranking for public cloud service providers in IaaS (Infrastructure as a Service) and PaaS (Platform as a Service) in China. 
  • According to the WIPO Artificial Intelligence Report for 2019 issued by the World Intellectual Property Organization, Baidu leads among companies globally in patent applications for deep learning sub-category of machine learning and is the only Chinese Internet company listed among the top 30 AI patent applicants worldwide.
  • Baidu IME (mobile keyboard) released an AI version in January 2019, which allows for mixed voice input in Mandarin with English and other Chinese dialects, real-time translation and augmented reality emoticons, demonstrating Baidu AI capabilities in voice, image and facial recognition. Over 60% of Baidu IME AI version users have opted for voice input.
  • The number of users (devices) that have used the voice assistant feature in Baidu Maps has surpassed 200 million in March 2019, over tripling over the prior year.
  • iQIYI

  • iQIYI subscribers reached 96.8 million in March 2019, adding 9.4 million members during the quarter, further strengthening its foundation to offer blockbuster original entertainment content.
  • In March 2019, iQIYI completed the offering of US$1.2 billion of 2.00% convertible senior notes due 2025, the proceeds from which, net of capped call fees, will be used to expand and enhance iQIYI's content offerings and strengthen its technologies, as well as for working capital and other general corporate purposes.
  • First Quarter 2019 Results

    Total revenues reached RMB 24.1 billion ($3.59 billion), increasing 15% year over year, or 21% year over year excluding the impact of announced divestures[4]. Online marketing revenues were RMB17.7 billion ($2.63 billion), increasing 3% year over year, which was mainly due to strength in education, retail, and business services, while healthcare, online games services, and financial services sectors were less vibrant. Other revenues were RMB 6.5 billion ($963 million), increasing 73% year over year, which was mainly due to the robust growth in iQIYI membership services, cloud and other businesses.

    Revenue from Baidu Core reached RMB 17.5 billion ($2.60 billion), increasing 8% year over year, or 16% year over year excluding the impact of announced divestures, while revenue from iQIYI reached RMB 7.0 billion ($1.04 billion), increasing 43% year over year.

    Content costs were RMB 6.2 billion ($917 million), increasing 47% year over year, mainly due to increased investments in iQIYI content and, to a lesser extent, in content for BJH accounts, Baidu feeds' content network.

    Traffic acquisition cost was RMB 3.2 billion ($474 million), increasing 41% year over year, as a result of higher TAC costs and revenues derived from online TV and offline digitalized screens.

    Bandwidth costs were RMB 2.0 billion ($304 million), increasing 39% year over year, mainly due to increasing demand from feed, video and cloud.

    Other cost of revenues, which includes depreciation, operational costs and share-based compensation, was RMB 3.5 billion ($515 million), increasing 75% year over year, mainly due to higher depreciation expense and the growth in sales of first-party smart devices.

    Selling, general and administrative expenses were RMB 6.1 billion ($902 million), increasing 93% year over year, primarily due to increased investment in channel and promotional marketing, including the marketing campaign around the Chinese New Year, as well as an increase in personnel related expenses.

    Research and development expenses were RMB 4.2 billion ($621 million), increasing 26% year over year, primarily due to an increase in personnel related expenses.

    Operating loss was RMB 936 million ($139 million), compared to operating income of RMB 4.6 billion in Q1 2018. Operating income of Baidu Core was RMB 1.1 billion ($163 million), decreasing 81% year over year. Non-GAAP operating income was RMB 401 million ($60 million), decreasing 93% year over year. Non-GAAP operating income of Baidu Core was RMB 2.1 billion ($314 million), decreasing 67% year over year.

    Total other income was RMB 900 million ($134 million), decreasing 57% year over year, mainly due to increased loss from equity method investments.

    Income tax expense was RMB 294 million ($44 million), compared to RMB 1.1 billion in Q1 2018. Low income tax expense in the quarter was mainly due to lower pre-tax income generated by Baidu Core.

    Net loss attributable to Baidu was RMB 327 million ($49 million), compared to net income attributable to Baidu of RMB 6.7 billion in Q1 2018. Diluted loss per ADS amounted to RMB 1($0.15). Net income attributable to Baidu Core was RMB 703 million ($105 million), decreasing 90% year over year. Non-GAAP net income attributable to Baidu was RMB 967 million ($144 million), decreasing 80% year over year. Non-GAAP diluted earnings per ADS amounted to RMB 3($0.41). Non-GAAP net income attributable to Baidu Core was RMB 1.8 billion ($272 million), decreasing 66% year over year.

    Adjusted EBITDA was RMB 1.8 billion ($263 million) and adjusted EBITDA margin was 7%. Adjusted EBITDA to Baidu Core was RMB 3.4 billion ($502 million) and adjusted EBITDA margin to Baidu Core was 19%. 

    As of March 31, 2019, cash, cash equivalents, restricted cash and short-term investments were RMB 143.6 billion ($21.40 billion). Excluding iQIYI, cash, cash equivalents, restricted cash and short-term investments were RMB 125.7 billion ($18.73 billion), as of March 31, 2019. Free cash flow was negative RMB 1.3 billion ($195 million). Excluding iQIYI, free cash flow was negative RMB 1.5 billion ($226 million).

    Financial Guidance

    For the second quarter of 2019, Baidu expects revenues to be between RMB 25.1 billion ($3.74 billion) and RMB 26.6 billion ($3.96 billion), representing -3% to 2% increase year over year, or 1% to 6% increase year over year, excluding revenues from announced divestures. Previously announced divestures, which were consummated in 2018, generated approximately RMB 1.0 billion revenue in Q2 2018. This 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 9:15 PM on May 16, 2019, U.S. Eastern Time (9:15 AM on May 17, 2019, Beijing/Hong Kong Time). Dial-in details for the earnings conference call are as follows:

    International:

    +65 67135090

    Mainland China                   

    4006208038

    US:

    +1 8456750437

    UK:

    +44 2036214779

    Hong Kong:

    +852 30186771

     
     

    Passcode for all regions:

    1374737

    A replay of the conference call may be accessed by phone at the following number until May 24, 2019:

    International:

    +61 2 8199 0299

    Passcode:

    1374737

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

    About Baidu

    Baidu, Inc. is the leading Chinese language Internet search provider. Baidu aims to make a complex 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: +86-10-5992-4958
    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 second quarter of 2019, 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 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 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 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 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 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 shares, adjusted for related income tax effects, are also excluded.

    Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated based on non-GAAP net income attributable to Baidu, adjusted for accretion for the redeemable noncontrolling interests. 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 6.7112 to US$1.00, the effective noon buying rate as of March 29, 2019, in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. Translations are provided for the convenience of the reader.

    [2] Excluding revenues from divested businesses Global DU and Du Xiaoman (financial services), which were approximately RMB1.1 billion for the three months ended March 31, 2018.

    [3] See the section titled "Non-GAAP Financial Measures", "Selected Information" and "Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures" for more information about the non-GAAP measures referred to within this announcements.

    [4] In 2018, Global DU businesses and Du Xiaoman (financial services) were divested, which together generated approximately RMB 1.1 billion in revenues in Q1 2018.

     

     

    Baidu, Inc. 

    Condensed Consolidated Balance Sheets

    (In millions except for share information)

     
     

    December 31,

     

    March 31,

     

    March 31,

     
     

    2018

     

    2019

     

    2019

     
     

    RMB

     

    RMB

     

    USD

     
     

    Audited

     

    Unaudited

     

    Unaudited

     
     
     
     
     
     
     

    ASSETS

     
     
     
     
     
     

        Current assets:

     
     
     
     
     
     

     Cash and cash equivalents

     

    27,638

     

    32,390

     

    4,826

     Restricted cash

     

    2,189

     

    2,177

     

    324

     Short-term investments

     

    111,626

     

    109,062

     

    16,251

     Accounts receivable, net

     

    6,015

     

    5,875

     

    875

     Amounts due from related parties

     

    785

     

    1,333

     

    199

     Other assets, current 

     

    6,841

     

    7,015

     

    1,045

        Total current assets

     

    155,094

     

    157,852

     

    23,520

     
     
     
     
     
     
     

        Non-current assets:

     
     
     
     
     
     

     Fixed assets, net

     

    17,903

     

    19,652

     

    2,928

     Intangible assets, net

     

    9,181

     

    8,898

     

    1,326

     Goodwill

     

    18,536

     

    19,096

     

    2,845

     Long-term investments, net

     

    80,454

     

    80,685

     

    12,022

     Amounts due from related parties

     

    4,297

     

    4,350

     

    648

     Deferred tax assets, net

     

    2,324

     

    2,293

     

    342

     Other assets, non-current 

     

    9,777

     

    16,130

     

    2,404

        Total non-current assets

     

    142,472

     

    151,104

     

    22,515

     
     
     
     
     
     
     

    Total assets

     

    297,566

     

    308,956

     

    46,035

     
     
     
     
     
     
     

    LIABILITIES AND EQUITY

     
     
     
     
     
     

       Current liabilities:

     
     
     
     
     
     

            Short-term loans

     

    3,046

     

    3,586

     

    534

    Accounts payable and accrued liabilities

     

    35,381

     

    33,848

     

    5,044

    Customer advances and deposits

     

    7,338

     

    7,059

     

    1,052

    Deferred revenue

     

    1,883

     

    1,774

     

    264

    Deferred income

     

    523

     

    511

     

    76

    Long-term loans, current portion

     

    84

     

    79

     

    12

    Notes payable, current portion

     

    6,871

     

    6,708

     

    1,000

    Amounts due to related parties

     

    1,727

     

    1,663

     

    248

    Other current liabilities

     

    -

     

    2,016

     

    300

        Total current liabilities

     

    56,853

     

    57,244

     

    8,530

     
     
     
     
     
     
     

        Non-current liabilities:

     
     
     
     
     
     

    Deferred income

     

    54

     

    31

     

    5

    Deferred revenue

     

    1,309

     

    1,156

     

    172

    Amounts due to related parties

     

    4,360

     

    4,396

     

    655

    Long-term loans

     

    7,456

     

    7,304

     

    1,088

    Notes payable

     

    42,735

     

    41,707

     

    6,215

    Convertible senior notes

     

    4,712

     

    11,553

     

    1,721

    Deferred tax liabilities

     

    4,099

     

    4,155

     

    619

    Other non-current liabilities

     

    236

     

    4,070

     

    606

        Total non-current liabilities

     

    64,961

     

    74,372

     

    11,081

     
     
     
     
     
     
     

    Total liabilities

     

    121,814

     

    131,616

     

    19,611

     
     
     
     
     
     
     

    Redeemable noncontrolling interests

     

    716

     

    922

     

    137

     
     
     
     
     
     
     

    Equity

     
     
     
     
     
     

    Class A Ordinary Shares, par value US$0.00005 per share, 825,000,000 shares authorized, and  27,733,692 shares and  27,800,277 shares issued and outstanding as at December 31, 2018 and  March 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 March 31, 2019

     

    -

     

    -

     

    -

    Additional paid-in capital

     

    33,441

     

    34,740

     

    5,176

    Retained earnings

     

    129,246

     

    128,903

     

    19,207

    Accumulated other comprehensive income

     

    210

     

    185

     

    28

        Total Baidu shareholders' equity

     

    162,897

     

    163,828

     

    24,411

        Noncontrolling interests

     

    12,139

     

    12,590

     

    1,876

    Total equity

     

    175,036

     

    176,418

     

    26,287

     
     
     
     
     
     
     

    Total liabilities, redeemable noncontrolling interests, and equity

     

    297,566

     

    308,956

     

    46,035

     

     

     

    Baidu, Inc. 

     

    Condensed Consolidated Statements of Income

     

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

     

    Three Months Ended

     
     
     

    March 31,

     

    December 31,

     

    March 31,

     

    March 31,

     
     
     

    2018

     

    2018

     

    2019

     

    2019

     
     
     

    RMB

     

    RMB

     

    RMB

     

    USD(2)

     
     
     

    Unaudited

     

    Unaudited

     

    Unaudited

     

    Unaudited

     

     Revenues: 

     
     
     
     
     
     
     
     
     

     Online marketing services 

     

    17,169

     

    21,197

     

    17,657

     

    2,631

     

     Others 

     

    3,738

     

    5,998

     

    6,466

     

    963

     

     Total revenues  

     

    20,907

     

    27,195

     

    24,123

     

    3,594

     
     
     
     
     
     
     
     
     
     
     

     Operating costs and expenses: 

     
     
     
     
     
     
     
     
     

         Content costs 

     

    4,194

     

    7,344

     

    6,157

     

    917

     

         Traffic acquisition costs 

     

    2,256

     

    3,375

     

    3,183

     

    474

     

         Bandwidth costs 

     

    1,472

     

    1,775

     

    2,040

     

    304

     

         Others 

     

    1,981

     

    3,117

     

    3,459

     

    515

     

         Cost of revenues(1)

     

    9,903

     

    15,611

     

    14,839

     

    2,210

     

         Selling, general and administrative(1)

     

    3,142

     

    5,943

     

    6,054

     

    902

     

         Research and development(1)

     

    3,294

     

    4,529

     

    4,166

     

    621

     

     Total operating costs and expenses 

     

    16,339

     

    26,083

     

    25,059

     

    3,733

     
     
     
     
     
     
     
     
     
     
     

     Operating income (loss) 

     

    4,568

     

    1,112

     

    (936)

     

    (139)

     
     
     
     
     
     
     
     
     
     
     

     Other income: 

     
     
     
     
     
     
     
     
     

     Interest income 

     

    821

     

    1,490

     

    1,072

     

    160

     

     Interest expense 

     

    (352)

     

    (574)

     

    (693)

     

    (103)

     

     Foreign exchange loss, net 

     

    (48)

     

    (50)

     

    (313)

     

    (47)

     

     Loss from equity method investments 

     

    (177)

     

    (390)

     

    (860)

     

    (128)

     

     Other income (loss), net 

     

    1,856

     

    (536)

     

    1,694

     

    252

     

     Total other income (loss) 

     

    2,100

     

    (60)

     

    900

     

    134

     
     
     
     
     
     
     
     
     
     
     

     Income (loss) before income taxes 

     

    6,668

     

    1,052

     

    (36)

     

    (5)

     

     Income taxes 

     

    1,120

     

    484

     

    294

     

    44

     

     Net income (loss) 

     

    5,548

     

    568

     

    (330)

     

    (49)

     

     Less: net income (loss) attributable to noncontrolling interests 

     

    (1,146)

     

    (1,513)

     

    (3)

     

    -

     

     Net income (loss) attributable to Baidu 

     

    6,694

     

    2,081

     

    (327)

     

    (49)

     
     
     
     
     
     
     
     
     
     
     

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

     
     
     
     
     
     
     
     
     

     -Basic

     

    18.86

     

    5.96

     

    (0.98)

     

    (0.15)

     

     -Diluted

     

    18.68

     

    5.93

     

    (0.98)

     

    (0.15)

     

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

     
     
     
     
     
     
     
     
     

     -Basic

     

    188.60

     

    59.55

     

    (9.81)

     

    (1.46)

     

     -Diluted

     

    186.76

     

    59.32

     

    (9.81)

     

    (1.46)

     

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

     
     
     
     
     
     
     

    Basic 

     

    34,838,392

     

    34,909,960

     

    34,966,643

     

    34,966,643

     

    Diluted

     

    35,180,950

     

    35,044,338

     

    34,966,643

     

    34,966,643

     
     
     
     
     
     
     
     
     
     
     

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

     
     
     
     
     
     
     
     
     

     Cost of revenues 

     

    35

     

    71

     

    66

     

    10

     

     Selling, general and administrative 

     

    291

     

    587

     

    516

     

    77

     

     Research and development 

     

    452

     

    884

     

    626

     

    93

     

     Total share-based compensation expenses 

     

    778

     

    1,542

     

    1,208

     

    180

     
     
     
     
     
     
     
     
     
     
     

    (2)  All translations from RMB to U.S. dollars are made at a rate of RMB6.7112 to US$1.00, the effective noon buying rate as of March 29, 2019, in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.

     

     

     

    Baidu, Inc. 

    Selected Information

    (In millions except for per ADS information, unaudited)

     
     

    Three Months Ended March 31, 2018 (RMB)

     

    Three Months Ended December 31, 2018 (RMB)

     

    Three Months Ended March 31, 2019 (RMB)

     

    Three Months Ended March 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.

     

    Baidu Core 

    iQIYI

    Elim & adj(3)

     

    Baidu, Inc.

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Total revenues 

     

    16,127

    4,877

    (97)

     

    20,907

     

    20,520

    7,028

    (353)

     

    27,195

     

    17,450

    6,990

    (317)

     

    24,123

     

    2,600

    1,042

    (48)

     

    3,594

    YOY

     
     
     
     
     
     
     
     
     
     
     
     
     

    8%

    43%

     
     

    15%

     
     
     
     
     
     

    YOY excluding revenue from divested businesses(1)

     
     
     
     
     
     
     
     
     

    16%

     
     
     

    21%

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Operating costs and expenses: 

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

     Cost of revenues (2)

     

    5,131

    4,848

    (76)

     

    9,903

     

    7,374

    8,524

    (287)

     

    15,611

     

    7,849

    7,277

    (287)

     

    14,839

     

    1,169

    1,085

    (44)

     

    2,210

     Selling, general and administrative (2)

     

    2,464

    704

    (26)

     

    3,142

     

    4,790

    1,221

    (68)

     

    5,943

     

    4,940

    1,141

    (27)

     

    6,054

     

    736

    170

    (4)

     

    902

     Research and development (2)

     

    2,908

    387

    (1)

     

    3,294

     

    3,923

    608

    (2)

     

    4,529

     

    3,570

    598

    (2)

     

    4,166

     

    532

    89

    -

     

    621

    Total operating costs and expenses 

     

    10,503

    5,939

    (103)

     

    16,339

     

    16,087

    10,353

    (357)

     

    26,083

     

    16,359

    9,016

    (316)

     

    25,059

     

    2,437

    1,344

    (48)

     

    3,733

    YOY

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

     Cost of revenues 

     
     
     
     
     
     
     
     
     
     
     
     
     

    53%

    50%

     
     

    50%

     
     
     
     
     
     

     Selling, general and administrative 

     
     
     
     
     
     
     
     
     
     
     
     
     

    100%

    62%

     
     

    93%

     
     
     
     
     
     

     Research and development 

     
     
     
     
     
     
     
     
     
     
     
     
     

    23%

    55%

     
     

    26%

     
     
     
     
     
     

    Total operating costs and expenses 

     
     
     
     
     
     
     
     
     
     
     
     
     

    56%

    52%

     
     

    53%

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Operating income (loss)

     

    5,624

    (1,062)

    6

     

    4,568

     

    4,433

    (3,325)

    4

     

    1,112

     

    1,091

    (2,026)

    (1)

     

    (936)

     

    163

    (302)

    -

     

    (139)

    Operating margin 

     

    35%

    (22%)

     
     

    22%

     

    22%

    (47%)

     
     

    4%

     

    6%

    (29%)

     
     

    (4%)

     

    6%

    (29%)

     
     

    (4%)

    YoY

     
     
     
     
     
     
     
     
     
     
     
     
     

    (81%)

    91%

     
     

    (120%)

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Total other income (loss)

     

    1,434

    666

    -

     

    2,100

     

    (30)

    (35)

    5

     

    (60)

     

    689

    211

    -

     

    900

     

    102

    32

    -

     

    134

    Less: income taxes 

     

    1,119

    1

    -

     

    1,120

     

    405

    79

    -

     

    484

     

    287

    7

    -

     

    294

     

    43

    1

    -

     

    44

    Less: net income (loss) attributable to NCI

     

    (1,149)

    (1)

    4

     

    (1,146)

     

    (52)

    38

    (1,499)

    (4)

    (1,513)

     

    790

    (8)

    (785)

    (4)

    (3)

     

    117

    (1)

    (116)

    (4)

    -

    Net income attributable to Baidu

     

    7,088

    (396)

    2

     

    6,694

     

    4,050

    (3,477)

    1,508

     

    2,081

     

    703

    (1,814)

    784

     

    (327)

     

    105

    (270)

    116

     

    (49)

    Net margin 

     

    44%

    (8%)

     
     

    32%

     

    20%

    (49%)

     
     

    8%

     

    4%

    (26%)

     
     

    (1%)

     

    4%

    (26%)

     
     

    (1%)

    YoY

     
     
     
     
     
     
     
     
     
     
     
     
     

    (90%)

    358%

     
     

    (105%)

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Diluted earnings (loss) per ADS

     
     
     
     
     

    18.68

     
     
     
     
     

    5.93

     
     
     
     
     

    (0.98)

     
     
     
     
     

    (0.15)

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Other Key Metrics

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Non-GAAP operating income (loss)

     

    6,370

    (1,005)

     
     

    5,371

     

    5,788

    (3,045)

     
     

    2,747

     

    2,110

    (1,708)

     
     

    401

     

    314

    (254)

     
     

    60

    Non-GAAP operating margin 

     

    39%

    (21%)

     
     

    26%

     

    28%

    (43%)

     
     

    10%

     

    12%

    (24%)

     
     

    2%

     

    12%

    (24%)

     
     

    2%

    YoY

     
     
     
     
     
     
     
     
     
     
     
     
     

    (67%)

    70%

     
     

    (93%)

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Non-GAAP net income (loss) to Baidu

     

    5,315

    (500)

     
     

    4,817

     

    6,513

    (3,196)

     
     

    4,703

     

    1,824

    (1,508)

     
     

    967

     

    272

    (225)

     
     

    144

    Non-GAAP net margin 

     

    33%

    (10%)

     
     

    23%

     

    32%

    (45%)

     
     

    17%

     

    10%

    (22%)

     
     

    4%

     

    10%

    (22%)

     
     

    4%

    YoY

     
     
     
     
     
     
     
     
     
     
     
     
     

    (66%)

    202%

     
     

    (80%)

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Adjusted EBITDA

     

    7,061

    (941)

     
     

    6,126

     

    6,870

    (2,952)

     
     

    3,922

     

    3,372

    (1,601)

     
     

    1,770

     

    502

    (239)

     
     

    263

    Adjusted EBITDA margin 

     

    44%

    (19%)

     
     

    29%

     

    33%

    (42%)

     
     

    14%

     

    19%

    (23%)

     
     

    7%

     

    19%

    (23%)

     
     

    7%

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Non-GAAP diluted earnings per ADS

     
     
     
     
     

    13.69

     
     
     
     
     

    13.42

     
     
     
     
     

    2.77

     
     
     
     
     

    0.41

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    (1)  Excluding revenues from divested businesses Global DU and Du Xiaoman (financial services), which were approximately RMB1.1 billion for the three months ended March 31, 2018. 

    (2)  Includes share-based compensation as follows:

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

     Cost of revenues 

     

    25

    10

     
     

    35

     

    43

    28

     
     

    71

     

    30

    36

     
     

    66

     

    5

    5

     
     

    10

     Selling, general and administrative 

     

    266

    25

     
     

    291

     

    435

    152

     
     

    587

     

    338

    178

     
     

    516

     

    50

    27

     
     

    77

     Research and development 

     

    440

    12

     
     

    452

     

    843

    41

     
     

    884

     

    584

    42

     
     

    626

     

    87

    6

     
     

    93

     Total share-based compensation 

     

    731

    47

     
     

    778

     

    1,321

    221

     
     

    1,542

     

    952

    256

     
     

    1,208

     

    142

    38

     
     

    180

    (3) Relates to intersegment eliminations and adjustments

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

     

     

     

    Baidu, Inc. 

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

    (In millions except for ADS and per ADS information, unaudited)

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Three Months Ended

     

    Three Months Ended

     

    Three Months Ended

     

    Three Months Ended

     
     

    March 31, 2018 (RMB)

     

    December 31, 2018 (RMB)

     

     March 31, 2019 (RMB) 

     

    March 31, 2019 (USD)

     
     

    Baidu Core

    iQIYI

    Baidu, Inc.

     

    Baidu Core

    iQIYI

    Baidu, Inc.

     

    Baidu Core

    iQIYI

    Baidu, Inc.

     

    Baidu Core

    iQIYI

    Baidu, Inc.

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Operating income (loss)

     

    5,624

    (1,062)

    4,568

     

    4,433

    (3,325)

    1,112

     

    1,091

    (2,026)

    (936)

     

    163

    (302)

    (139)

    Add:  Share-based compensation expenses

     

    731

    47

    778

     

    1,321

    221

    1,542

     

    952

    256

    1,208

     

    142

    38

    180

    Add:  Amortization of intangible assets(1)

     

    15

    10

    25

     

    34

    59

    93

     

    67

    62

    129

     

    9

    10

    19

    Non-GAAP operating income (loss)

     

    6,370

    (1,005)

    5,371

     

    5,788

    (3,045)

    2,747

     

    2,110

    (1,708)

    401

     

    314

    (254)

    60

    Add:  Depreciation of fixed assets

     

    691

    64

    755

     

    1,082

    93

    1,175

     

    1,262

    107

    1,369

     

    188

    15

    203

    Adjusted EBITDA

     

    7,061

    (941)

    6,126

     

    6,870

    (2,952)

    3,922

     

    3,372

    (1,601)

    1,770

     

    502

    (239)

    263

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Net income (loss) attributable to

     

    7,088

    (396)

    6,694

     

    4,050

    (3,477)

    2,081

     

    703

    (1,814)

    (327)

     

    105

    (270)

    (49)

    Add: Share-based compensation expenses

     

    731

    47

    778

     

    1,319

    221

    1,444

     

    947

    256

    1,092

     

    141

    38

    162

    Add: Amortization of intangible assets(1), net of tax

     

    11

    8

    19

     

    19

    47

    46

     

    27

    49

    54

     

    4

    7

    8

    Add: Disposal loss (gain), net of tax

     

    489

    -

    489

     

    282

    -

    282

     

    (31)

    1

    (30)

     

    (5)

    -

    (4)

    Add: Impairment of long-term investments, net of tax

     

    83

    -

    83

     

    185

    -

    185

     

    279

    -

    279

     

    42

    -

    42

    Add: Fair value change of long-term investments, net of tax

     

    (3,353)

    (159)

    (3,512)

     

    16

    13

    23

     

    (1,058)

    -

    (1,058)

     

    (158)

    -

    (158)

    Add: Reconciling items on equity method investments, net of tax(2)

     

    266

    -

    266

     

    642

    -

    642

     

    957

    -

    957

     

    143

    -

    143

    Non-GAAP net income (loss) attributable to

     

    5,315

    (500)

    4,817

     

    6,513

    (3,196)

    4,703

     

    1,824

    (1,508)

    967

     

    272

    (225)

    144

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Diluted earnings (loss) per ADS

     
     
     

    18.68

     
     
     

    5.93

     
     
     

    (0.98)

     
     
     

    (0.15)

    Add:  Accretion of the redeemable noncontrolling interests

     
     
     

    0.35

     
     
     

    0.01

     
     
     

    0.05

     
     
     

    0.01

    Add:  Non-GAAP adjustments to earnings per ADS

     
     
     

    (5.34)

     
     
     

    7.48

     
     
     

    3.70

     
     
     

    0.55

    Non-GAAP diluted earnings per ADS

     
     
     

    13.69

     
     
     

    13.42

     
     
     

    2.77

     
     
     

    0.41

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Net cash provided by operating activities

     

    7,340

    1,207

    8,547

     

    8,409

    528

    8,937

     

    1,282

    379

    1,661

     

    191

    56

    247

    Less: Capital expenditures

     

    (1,895)

    (75)

    (1,970)

     

    (2,900)

    (178)

    (3,078)

     

    (2,801)

    (172)

    (2,973)

     

    (417)

    (25)

    (442)

    Free cash flow

     

    5,445

    1,132

    6,577

     

    5,509

    350

    5,859

     

    (1,519)

    207

    (1,312)

     

    (226)

    31

    (195)

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    (1) This represents amortization of intangible assets resulting from business combinations.

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    (2) This represents Baidu's share of equity method investments for other non-GAAP reconciling items, amortization 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 shares, adjusted for related income tax effects.

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    (3) Non-GAAP measures are adjusted retroactively to exclude: 1) amortization of intangible assets resulting from business combinations ; and 2) share-based compensation and amortization of intangible assets not on the investees' books, resulting from equity method pick up; and 3) fair value change of the investees' long-term investments, net of tax, as follows:

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Non-GAAP operating income, previously reported

     

    6,355

    (1,015)

    5,346

     

    5,754

    (3,104)

    2,654

     

    2,043

    (1,770)

    272

     

    305

    (264)

    41

    Add:  Amortization of intangible assets(1)

     

    15

    10

    25

     

    34

    59

    93

     

    67

    62

    129

     

    9

    10

    19

    Non-GAAP operating income, revised

     

    6,370

    (1,005)

    5,371

     

    5,788

    (3,045)

    2,747

     

    2,110

    (1,708)

    401

     

    314

    (254)

    60

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Non-GAAP net income attributable to Baidu, previously reported

     

    5,091

    (508)

    4,585

     

    6,458

    (3,243)

    4,621

     

    1,524

    (1,557)

    640

     

    227

    (232)

    95

    Add: Adjustments relating to equity-method investments, net of tax

     

    213

    -

    213

     

    36

    -

    36

     

    273

    -

    273

     

    41

    -

    41

    Add: Amortization of intangible assets(1), net of tax

     

    11

    8

    19

     

    19

    47

    46

     

    27

    49

    54

     

    4

    7

    8

    Non-GAAP net income attributable to Baidu, revised

     

    5,315

    (500)

    4,817

     

    6,513

    (3,196)

    4,703

     

    1,824

    (1,508)

    967

     

    272

    (225)

    144

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

    Adjusted EBITDA, previously reported

     

    7,072

    (939)

    6,139

     

    6,887

    (2,877)

    3,970

     

    3,387

    (1,526)

    1,820

     

    505

    (227)

    271

    Less:  Adjustments to amortization of intangible assets

     

    (11)

    (2)

    (13)

     

    (17)

    (75)

    (48)

     

    (15)

    (75)

    (50)

     

    (3)

    (12)

    (8)

    Adjusted EBITDA, revised

     

    7,061

    (941)

    6,126

     

    6,870

    (2,952)

    3,922

     

    3,372

    (1,601)

    1,770

     

    502

    (239)

    263

     

     

     

    Cision View original content:http://www.prnewswire.com/news-releases/baidu-announces-first-quarter-2019-results-300852037.html

    SOURCE Baidu, Inc.