Sou Hu Cai Jing·2025-08-21 04:15Core Insights - Baidu's Q2 2025 financial report indicates a revenue decline of 4% year-on-year, marking the weakest performance for the second quarter since 2023, with total revenue at 32.7 billion RMB [1][3] - The net profit attributable to the company increased by 33% year-on-year to 7.322 billion RMB, while the Non-GAAP net profit decreased by 35% to 4.795 billion RMB [1][3] Revenue Breakdown - iQIYI, a subsidiary of Baidu, reported a revenue of 6.6 billion RMB, down 11% year-on-year. Excluding iQIYI, Baidu's core business revenue was 26.25 billion RMB, a 2% decline [3][4] - Online advertising revenue, Baidu's largest income source, fell by 15% to 16.2 billion RMB, reducing its share of core revenue from 71.95% to 61.7% [4][5] AI Transformation - Baidu is undergoing a significant transformation towards AI, with a major search engine overhaul that allows for more complex queries and integrates AI-generated content [5][6] - AI-generated content in mobile search results increased from 35% in April to 64% in July, enhancing user experience but putting pressure on traditional advertising revenue [5][6] Business Performance - Non-advertising business revenue, including Baidu Cloud and smart driving, reached 10 billion RMB, a 34% increase year-on-year, with Baidu Cloud revenue growing by 27% to 6.5 billion RMB [6][7] - The company is facing short-term cash flow pressures due to increased investments in AI, with free cash flow reported at negative 4.7 billion RMB as of June 30, 2025 [6][7] Management Changes - Baidu's CFO position has seen frequent changes, with He Haijian taking over in July 2025, bringing extensive investment banking experience [7]