BIDU(BIDU) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Business and Financial Overview Management Commentary Management highlighted robust AI Cloud growth and non-online marketing revenue exceeding RMB 10 billion, offsetting online marketing pressure and focusing on AI transformation and global expansion - AI Cloud's strong growth and comprehensive AI product suite helped mitigate the near-term pressure on the online marketing business[2] - Baidu Core's non-online marketing revenue surpassed RMB 10 billion for the first time, growing 34% year-over-year, indicating a more diversified revenue mix[2] - The company remains committed to strategic AI investments, focusing on the Mobile Ecosystem, AI Cloud, and the global expansion of Apollo Go[2] Q2 2025 Financial Highlights Baidu reported total revenues of RMB 32.7 billion, a 4% YoY decrease, with operating income and non-GAAP net income declining significantly, while GAAP net income grew 33% to RMB 7.3 billion Baidu, Inc. Q2 2025 Financial Highlights (in millions RMB, except per ADS) | Metric | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Total revenues | 33,931 | 32,713 | -4% | | Operating income | 5,944 | 3,277 | -45% | | Net income to Baidu | 5,488 | 7,322 | +33% | | Operating income (non-GAAP) | 7,500 | 4,445 | -41% | | Net income to Baidu (non-GAAP) | 7,396 | 4,795 | -35% | | Diluted earnings per ADS | 15.01 | 20.35 | +36% | | Diluted earnings per ADS (non-GAAP) | 21.02 | 13.58 | -35% | Q2 2025 Operational Highlights The company achieved significant operational milestones, including open-sourcing ERNIE 4.5, expanding Apollo Go's driverless rides and global partnerships, and accelerating AI transformation of Baidu Search Corporate and AI Cloud Baidu advanced AI capabilities by open-sourcing ERNIE 4.5 and MuseSteamer, continued share repurchases of US$677 million, and maintained its No.1 AI cloud provider ranking in China - Open-sourced ERNIE 4.5, its latest and most advanced family of foundation models, in June 2025[6] - Returned US$677 million to shareholders since the beginning of Q1 2025, with a cumulative repurchase of US$2.3 billion under the 2023 program[6] - Baidu AI Cloud was ranked the No.1 AI cloud provider in China for the sixth consecutive year, according to a 2024 IDC report[6] Intelligent Driving (Apollo Go) Apollo Go significantly scaled operations with over 2.2 million driverless rides, a 148% YoY increase, forged international partnerships with Uber and Lyft, and expanded to 16 global cities - Provided over 2.2 million fully driverless rides in Q2 2025, representing a 148% year-over-year increase[6] - Entered strategic partnerships with Uber and Lyft to deploy its fully autonomous vehicles on their platforms across international markets[6] - Expanded its global footprint to 16 cities as of June 2025, with new open-road testing in Hong Kong, Dubai, and Abu Dhabi[6] Mobile Ecosystem Baidu Search's AI transformation accelerated, with over 50% of mobile search results containing AI-generated content, and Baidu App MAUs grew 5% YoY to 735 million - The AI transformation of Baidu Search accelerated, with over 50% of mobile search result pages containing AI-generated content by the end of June 2025[6] - In June 2025, Baidu App's Monthly Active Users (MAUs) reached 735 million, an increase of 5% year over year[6] - Managed Page accounted for 50% of Baidu Core's online marketing revenue in the second quarter of 2025[6] Detailed Financial Results Consolidated Financial Performance Total revenues decreased 4% YoY to RMB 32.7 billion, impacted by online marketing decline but offset by 34% non-online marketing growth; operating income fell 45% to RMB 3.3 billion, while net income rose 33% to RMB 7.3 billion due to other income Q2 2025 Key Income Statement Items (YoY) | Item | Amount (RMB billion) | YoY Change | | :--- | :--- | :--- | | Total Revenues | 32.7 | -4% | | Cost of Revenues | 18.4 | +12% | | SG&A Expenses | 6.0 | +5% | | R&D Expenses | 5.1 | -13% | | Operating Income | 3.3 | -45% | | Net Income to Baidu | 7.3 | +33% | - Baidu Core's non-online marketing revenue grew 34% YoY to RMB 10.0 billion, driven by the AI Cloud business, while online marketing revenue fell 15% YoY to RMB 16.2 billion[26] - Total other income increased 531% year over year to RMB 4.9 billion, primarily due to an increase in fair value gain and earnings from long-term investments[10] Financial Position and Cash Flow As of June 30, 2025, Baidu maintained a strong liquidity position with RMB 124.2 billion in cash and investments, but reported negative free cash flow of RMB 4.7 billion due to AI investments - As of June 30, 2025, cash, cash equivalents, restricted cash and short-term investments were RMB 124.2 billion ($17.34 billion)[13] - Free cash flow was negative RMB 4.7 billion (negative $653 million), primarily due to an increase of investment in the AI business[13] - The company's net cash position was RMB 155.1 billion ($21.66 billion) as of June 30, 2025[13] Financial Statements and Supplementary Data Condensed Consolidated Statements of Income This section presents the detailed unaudited consolidated income statement for the three and six months ended June 30, 2025, detailing revenues, costs, operating income, and net income - The report includes detailed consolidated statements of income for Q2 2025, Q1 2025, and Q2 2024, showing line items from revenues down to diluted earnings per ADS[25][27] Condensed Consolidated Balance Sheets This section presents the detailed unaudited consolidated balance sheet as of June 30, 2025, compared to December 31, 2024, detailing assets, liabilities, and equity - The report provides a detailed breakdown of assets, liabilities, and equity as of June 30, 2025, with total assets amounting to RMB 450.6 billion[28][29] Condensed Consolidated Statements of Cash Flows This section details the unaudited consolidated cash flow statement for Q2 2025, outlining cash movements from operating, investing, and financing activities for Baidu, Inc. and Baidu excluding iQIYI - The detailed cash flow statements show net cash used in operating activities was RMB 877 million in Q2 2025, a significant decrease from the RMB 8.4 billion provided in the same period last year[31][32] Segment Information This section provides a detailed financial breakdown of Baidu Core and iQIYI segments, showing Baidu Core revenue decreased 2% to RMB 26.3 billion and iQIYI revenue decreased 11% to RMB 6.6 billion Q2 2025 Segment Performance (YoY) | Segment | Total Revenues (RMB billion) | YoY Change | Operating Income (RMB billion) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Baidu Core | 26.3 | -2% | 3.3 | -41% | | iQIYI | 6.6 | -11% | -0.046 | N/A | Reconciliations of Non-GAAP Financial Measures This section provides detailed reconciliations of GAAP to non-GAAP financial measures, including operating income and net income, adjusting for items like share-based compensation and intangible asset amortization - The report provides detailed tables reconciling GAAP measures to non-GAAP measures, including Operating Income, Net Income, and Adjusted EBITDA for both Baidu Core and iQIYI[33] - Key reconciling items from GAAP to non-GAAP net income include share-based compensation expenses (RMB 1,024 million), fair value changes of long-term investments (RMB -3,309 million), and amortization of intangible assets (RMB 84 million)[33]