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Baidu Announces Fourth Quarter and Fiscal Year 2019 Results

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BEIJING , Feb. 27, 2020 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU) ("Baidu" or the "Company"), a leading search engine, knowledge and information centered Internet platform and AI company, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2019 [1] .

"We finished 2019 making tremendous progress in strengthening Baidu's mobile ecosystem. Through the building blocks of BJH publisher accounts, Smart Mini Program and Managed Page, Baidu App provides users single log-on, native-app-like experience to a wide range of information and services dispersed across isolated mobile apps and HTML5 websites. Baidu App's spanning mobile ecosystem has resulted in more users logging in, DAUs growing robustly to 195 million in December, up 21% year over year, and in-app search queries increasing almost 30% year over year," said Robin Li , Chairman and CEO of Baidu. "Baidu new AI businesses have also made great strides in 2019, as we built leadership in smart devices, smart transportation and enterprise cloud solutions with Baidu's leading AI technologies."

"Baidu delivered solid fourth quarter results with increasing year-over-year revenue growth rate, allowing 2019 revenue to reach RMB 107 billion , or US$15.4 billion ," said Herman Yu , CFO of Baidu. "Baidu's quarterly operating margin has also been improving, through the strengthening of Baidu's mobile ecosystem and our focus on resource investment returns. Our leaner financial model and strong balance sheet put us in a good position to weather the slowing macro, while continuing to invest heavily in technology and new businesses, to optimize future growth."

Fourth Quarter 2019 Financial Highlights


Baidu, Inc.


For the three-month ended

(In millions except for per ADS information,
unaudited)

December 31,
2018


September 30,
2019


December 31,
2019


YOY


QOQ


December 31,
2019


RMB


RMB


RMB






US$

Total revenues  

27,195


28,080


28,884


6%


3%


4,149

Operating income

1,112


2,355


4,655


319%


98%


669

Operating margin

4%


8%


16%







Non-GAAP operating income

2,747


3,691


6,753


146%


83%


970

Non-GAAP operating margin

10%


13%


23%



















Net income (loss) attributable to Baidu

2,081


(6,373)


6,345


205%


-


911

Net margin

8%


(23%)


22%







Non-GAAP net income attributable to Baidu

4,703


4,387


9,193


95%


110%


1,320

Non-GAAP net margin

17%


16%


32%







Diluted earnings (loss) per ADS

5.93


(18.37)


18.25


208%


-


2.62

Non-GAAP diluted earnings per ADS

13.42


12.61


26.54


98%


110%


3.81














Baidu Core


For the three-month ended

(In millions except for per ADS information,

December 31,


September 30,


December 31,






December 31,

unaudited)

2018


2019


2019


YOY


QOQ


2019


RMB


RMB


RMB






US$

Total revenues  

20,520


21,010


21,711


6%


3%


3,119

Operating income

4,433


5,191


6,870


55%


32%


987

Operating margin

22%


25%


32%







Non-GAAP operating income

5,788


6,224


8,492


47%


36%


1,220

Non-GAAP operating margin

28%


30%


39%







Net income (loss) attributable to Baidu Core

4,050


(4,287)


7,433


84%


-


1,068

Net margin

20%


(20%)


34%







Non-GAAP net income attributable to Baidu Core

6,513


6,310


9,950


53%


58%


1,429

Non-GAAP net margin

32%


30%


46%







Fiscal Year 2019 Financial Highlights


Baidu, Inc.


For the twelve-month ended 

(In millions except for per ADS information, 

December 31,


December 31,






December 31,

unaudited)

2018


2019


YOY


YOY [2]  


2019


RMB


RMB






US$

Total revenues 

102,277


107,413


5%


8%


15,429

Operating income

15,530


6,307


(59%)




906

Operating margin 

15%


6%







Non-GAAP operating income

20,425


12,800


(37%)




1,839

Non-GAAP operating margin 

20%


12%







Net income attributable to Baidu

27,573


2,057


(93%)




296

Net margin

27%


2%







Non-GAAP net income attributable to Baidu

23,976


18,182


(24%)




2,612

Non-GAAP net margin

23%


17%







Diluted earnings per ADS

78.03


5.60


(93%)




0.80

Non-GAAP diluted earnings per ADS

68.17


52.04


(24%)




7.48












Baidu Core


For the twelve-month ended 

(In millions except for per ADS information, 

December 31,


December 31,






December 31,

unaudited)

2018


2019


YOY


YOY [ 2]


2019


RMB


RMB






US$

Total revenues 

78,271


79,711


2%


6%


11,450

Operating income

23,808


15,261


(36%)




2,192

Operating margin 

30%


19%







Non-GAAP operating income

28,020


20,311


(28%)




2,917

Non-GAAP operating margin 

36%


25%







Net income attributable to Baidu Core

33,605


7,580


(77%)




1,089

Net margin

43%


10%







Non-GAAP net income attributable to Baidu Core

29,059


22,824


(21%)




3,278

Non-GAAP net margin

37%


29%







Other Highlights

Corporate

  • Baidu employees have devoted significant efforts to help contain the novel coronavirus outbreak and fulfill the Company's corporate social responsibility, including the following:
    - On Baidu App, the Company launched a free medical consultation platform, to provide online access to doctors, answer pneumonia-related questions and save hospital resources. Baidu also partnered with medical experts to provide authoritative information on the novel coronavirus and leveraged its large platform reach to make available timely, reliable information to the public.
    - Baidu Maps is providing timely information, including the location of traffic control areas, designated hospitals and infected cases, to help users cope with the coronavirus outbreak. By leveraging big data, Baidu Maps helps track population migration and predict the spread of the epidemic in China .
    - Baidu leveraged its facial recognition and other AI technologies to develop and deploy many fever-screening systems to railway stations, hospitals and municipal government buildings in China . Baidu's fever-screening system can remotely measure the temperature of up to 200 people per minute, detect body temperatures of people wearing face masks and hats, and identify those not wearing masks or wearing them improperly. Baidu's AI model has also been open sourced, to further help reduce the spread of the coronavirus.
    - Baidu has pledged RMB 300 million to these efforts, provide awareness education and improve public health in China .
  • The Company reported its ESG progress for 2019, noting: 1) Baidu AI has helped reunite over 10,000 missing persons with their families; and 2) Baidu data centers reduced carbon emissions by over 180,000 tons in 2019, with the average power usage effectiveness (PUE) of its data centers reaching 1.14, far exceeding the global industry average of 1.67 according to Uptime Institute, a globally recognized data center advisory organization.
  • Baidu returned $149 million to its shareholders in the fourth quarter of 2019, under the 2019 Share Repurchase Program.

Mobile Ecosystem

  • Baidu App's average daily active users ("DAUs") reached 195 million, up 21% year over year, in December 2019 .
  • Baidu App's large user scale and unique search-plus-feed distribution channels are attracting more original content creators, with BJH publisher accounts for Baidu feed, reaching 2.6 million, up 38% year over year, in December 2019 .
  • Baidu has partnered with major TV and provincial satellite stations, to provide TV streaming and VOD in Baidu App and short video apps. Through Baidu's mobile building blocks, TV stations can leverage Baidu's powerful content distribution channels to extend their reach and allow online users to engage with the TV shows.
  • Merchants with HTML5 websites across many industries are switching to Baidu Managed Page, as the landing page for their search result. Revenue from Baidu Managed Page reached almost a quarter of Baidu Core's online marketing services revenue in the fourth quarter of 2019.
  • Merchants with app development capabilities are adopting Baidu Smart Mini Program, whose monthly active users ("MAUs") reached 316 million, up 114% year over year, in December 2019 .
  • All six major express delivery companies in China have adopted Baidu Smart Mini Program, which provides native-app-like experience to logged-in users, such as allowing them to check the shipping status of their e-commerce orders and request for an express delivery simply by searching "express delivery" in Baidu App.
  • Baidu Smart Mini Program is also extending its reach to government services. For example, employees in China can check the information of their housing fund, similar to social security in the U.S., by simply scanning their face with Baidu App, as a logged-in user.

DuerOS

  • Monthly voice queries on DuerOS, a leading voice assistant for the Chinese language, surpassed 5.0 billion, up over 3 fold year over year, in December 2019 . Monthly voice queries from Xiaodu first-party devices were 2.3 billion, up over 7 fold year over year.
  • DuerOS skills store now offers over 3,600 skills in wide ranging genres, including online education, gaming and live streaming. DuerOS developer community has expanded to over 38,000 members.
  • Xiaodu smart speakers ranked #1 in smart speaker shipments in China and Xiaodu Smart Display ranked #1 in smart display shipments globally for full year 2019, according to well-recognized market analytics firms Strategy Analytics and Canalys.
  • Baidu released Xiaodu Smart Display X8 in December 2019 , with enhanced capabilities powered by Baidu AI, allowing users to wake the device up with eye gestures, pause streaming content with hand gestures and receive report on moving objects in the house when the owner leaves home.

Cloud, AI Services & AI Platform 

  • Baidu partnered with Shanghai Pudong Development Bank, to launch a blockchain alliance with major Chinese commercial banks for inter-bank information verification built on Baidu's Blockchain as a Service (BaaS) platform.
  • In November 2019 , Baidu released its end-to-end far-field Automatic Speech Recognition (ASR) solutions, based on in-house designed Baidu Honghu  AI chip. Baidu Brain's leading speech recognition capabilities are used across Baidu products, including Xiaodu smart speakers, DuerOS in-vehicle infotainment, Baidu Maps and Baidu call-center enterprise solutions. Developers have tapped Baidu Brain's speech recognition engine on Baidu open AI platform more than 10 billion times.
  • Baidu is applying Baidu Kunlun, its high-performance AI chip, optimizing visual, speech, natural language processing and other AI capabilities, to power the Company's cloud servers.
  • In December 2019 , Baidu's pre-training framework for language understanding, ERNIE (Enhanced Representation through kNowledge IntEgration), became the first to score above 90 on the General Language Understanding Evaluation benchmark, or GLUE, which is widely considered as the benchmark for testing AI language understanding and otherwise dominated by U.S. technology firms and universities. ERNIE powers Baidu search and Xiaodu smart devices, to provide the best user experience.
  • Baidu Maps has been selected by Tesla China to provide map cloud services, such as real-time traffic condition reporting, base map display and point-of-interest search. Baidu Maps is a leading location based service platform, supporting 1.8 million developers and tracking 2 billion daily kilometers.

Apollo

  • Baidu partnered with Cangzhou, Hebei province, to develop smart transportation using Baidu's V2X solutions to improve traffic condition and safety. The adoption of Baidu's V2X solutions has led to a second Apollo robotaxi pilot program, launched in November 2019 , with an initial fleet of 30 vehicles.
  • Baidu also partnered with Yinchuan, Ningxia province, to provide the provincial capital with Baidu's V2X solutions to support autonomous trucking.
  • At the Apollo Partner Conference in December 2019 , Apollo v5.5 was released to support urban road point-to-point autonomous driving, as well as open-platform development for V2X and IoV solutions. Apollo has garnered 177 leading OEMs, suppliers and other partners, and over 36,000 developers worldwide.
  • Apollo fleet has reached 3 million test kilometers on the road in December 2019 , spanning across 23 cities, including Beijing , Wuhan , Cangzhou and Changchun . The municipality of Beijing granted Baidu its first batch of 40 manned autonomous driving licenses in December 2019 .

iQIYI

  • iQIYI subscribers reached 106.9 million in December 2019 , adding 19.5 million subscribers year over year. iQIYI's large subscriber base further strengthens iQIYI's foundation to produce entertainment-oriented blockbuster originals.

Fourth Quarter 2019 Results

Total revenues reached RMB 28.9 billion ( $4.15 billion ), up 6% year over year and 3% quarter over quarter. Online marketing revenues were RMB 20.8 billion ( $2.98 billion ), decreasing 2% year over year and increasing 2% quarter over quarter. Other revenues were RMB 8.1 billion ( $1.17 billion ), increasing 35% year over year, driven mainly by the strong growth in cloud services, smart devices and iQIYI membership.

Revenue from Baidu Core reached RMB 21.7 billion ( $3.12 billion ), increasing 6% year over year and 3% quarter over quarter. Revenue from iQIYI reached RMB 7.5 billion ( $1.08 billion ), up 7% year over year. iQIYI membership revenue grew 21% year over year, offset by online advertising revenue declining 15% year over year.

Cost of revenues , were RMB 15.5 billion ( $2.23 billion ), decreasing 1% year over year, primarily due to a decrease in content costs and traffic acquisition costs, offset by increases in hardware and cloud cost of goods sold, impairment and amortization of intangible assets and depreciation expenses.

Selling, general and administrative expenses were RMB 4.0 billion ( $568 million ), decreasing 33% year over year, primarily due to decreased investment in channel spending and promotional marketing, as well as lower personnel related expenses.

Research and development expenses were RMB 4.8 billion ( $683 million ), increasing 5% year over year, primarily due to an increase in personnel related expenses.

Operating income was RMB 4.7 billion ( $669 million ) and operating margin was 16%. Baidu Core operating income was RMB 6.9 billion ( $987 million ), and Baidu Core operating margin was 32%.

Non-GAAP operating income was RMB 6.8 billion ( $970 million ), and non-GAAP operating margin was 23%. Non-GAAP Baidu Core operating income was RMB 8.5 billion ( $1.22 billion ), and non-GAAP Baidu Core operating margin was 39%.               

Total other income was RMB 699 million ( $101 million ), compared to total other loss of RMB 60 million for Q4 2018.

Income tax expense was RMB 304 million ( $44 million ), compared to RMB 484 million in Q4 2018.

Net income attributable to Baidu was RMB 6.3 billion ( $ 911 million ), and diluted earnings per ADS was RMB 18 ($2.62) . Net income attrib...