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Baidu Q4 Earnings: AI Cloud Grows, Margin Slides, Expects AI Investments To Bear Fruit In 2025
BIDUBIDU(BIDU) Benzinga·2025-02-18 12:42

Core Insights - Baidu, Inc reported fiscal fourth-quarter revenue of 4.68billion,a24.68 billion, a 2% year-on-year decline, but exceeded analyst consensus estimates of 4.56 billion [1] - Adjusted earnings per ADS were 2.63,surpassingtheanalystconsensusestimateof2.63, surpassing the analyst consensus estimate of 1.78 [1] - The stock price experienced a decline following the earnings report [1] Revenue Breakdown - Core revenue increased by 1% year over year to 3.8billion[1]−Onlinemarketingrevenuefellby73.8 billion [1] - Online marketing revenue fell by 7% year over year to 2.46 billion [1] - Non-online marketing revenue rose by 18% year over year to 1.34billion,drivenbytheAICloudbusiness,whichgrewby261.34 billion, driven by the AI Cloud business, which grew by 26% during the quarter [2] Expense and Profitability Metrics - SG&A expenses were 915 million, up 14% year over year, attributed to increased expected credit losses, channel spending, and promotional marketing expenses [3] - R&D expenses decreased by 12% year over year to 756million[3]−AdjustedEBITDAmargindeclinedby600basispointsto20756 million [3] - Adjusted EBITDA margin declined by 600 basis points to 20%, while Core adjusted EBITDA margin also decreased by 600 basis points to 24% [3] - As of December 31, 2024, Baidu had 19.1 billion in cash and equivalents and generated 3millioninfreecashflowduringthequarter[3]StrategicDirection−CEORobinLiindicatedthat2024isapivotalyearforBaidu′stransformationfromaninternet−centrictoanAI−firstbusiness,withAICloudgainingmomentum[4]−ThecompanyisadvancingitsAItransformationintheMobileEcosystem,withApolloGofacilitatingglobalexpansionandscalablestrategies[4]−LianticipatesthatAIinvestmentswillyieldmoresignificantresultsin2025[4]MarketPerformance−Baidu′sstockdeclined83 million in free cash flow during the quarter [3] Strategic Direction - CEO Robin Li indicated that 2024 is a pivotal year for Baidu's transformation from an internet-centric to an AI-first business, with AI Cloud gaining momentum [4] - The company is advancing its AI transformation in the Mobile Ecosystem, with Apollo Go facilitating global expansion and scalable strategies [4] - Li anticipates that AI investments will yield more significant results in 2025 [4] Market Performance - Baidu's stock declined 8% over the last 12 months, as its AI models struggled to gain traction [5] - The company plans to launch Ernie 5.0 in late 2025 and will offer Ernie Bot free to all users [5] - Baidu is a key partner for Apple Inc as it aims to integrate AI features into its iPhones for the Chinese market [5] - BIDU stock traded lower by 2.29% at 95.25 in premarket trading following the report [5]