On November 22, Beijing time, Baidu (NASDAQ: BIDU, HKEX: 9888) released its unaudited financial report for the third quarter ended September 30, 2022. In the third quarter, Baidu achieved revenue of 32.54 billion yuan, and increased by 42% year-on-year; the net profit attributable to Baidu (non-GAAP) reached 5.89 billion yuan, a year-on-year increase of 16%, exceeding market expectations.
Thanks to the continuous cost reduction and efficiency improvement measures, Baidu's operating efficiency has improved and its profitability has been repaired quarter by quarter. In the third quarter, Baidu's core operating profit (non-GAAP) achieved its first year-on-year growth since the second quarter of 2021: core operating profit (non-GAAP) increased by 14% year-on-year to 6.65 billion yuan, and the core operating profit margin (non-GAAP) reached 26.3%.
" Despite the ongoing challenges brought by the new crown epidemic, Baidu Core still recorded steady financial and operating results in the third quarter. Baidu Core's revenue resumed positive growth, driven by the gradual recovery of our online marketing business and the steady growth of smart cloud revenue. It is worth noting that we continue to make major breakthroughs in the intelligent driving business segment. On the one hand, Baidu Apollo Automotive Solutions continue to gain recognition from leading automakers. On the other hand, Radish Quick Run continues to expand its operating scale, supplying more than 474,000 orders in the quarter, further consolidating its leading position in the global autonomous driving service market." Baidu founder, chairman and CEO Robin Li said, "Looking forward, we expect the mobile ecosystem to continue to generate strong cash flow for us in intelligence Investment in cloud and intelligent driving services provides funds to consolidate our leading position in new AI business and promote our future growth."
Baidu Chief Financial Officer Luo Rong said: "In the third quarter of 2022, although the resurgence of the new crown epidemic has put pressure on revenue performance, Baidu's core operating profit (non-GAAP) increased by 14% year-on-year to RMB 6.7 billion. This achievement is attributed to our unremitting efforts to reduce costs and increase efficiency. Looking ahead, we will continue to focus on high-quality revenue growth. At the same time, we will continue to invest in technology and talents to promote our future development."
In addition, Baidu's financial report shows that Baidu spent US$272 million to repurchase shares since the third quarter of 2022; based on the share repurchase plan that began in 2020, Baidu's cumulative repurchase amount reached US$3.2 billion.
Baidu Smart Cloud focuses on high-quality growth, and the business health continues to be optimized
In the third quarter, the epidemic brought challenges to the implementation of cloud business, but Baidu Smart Cloud still maintained a positive and healthy growth momentum, with revenue increasing by 24% year-on-year, higher than the industry average, and promoted Baidu's core non-advertising revenue to grow by 25% year-on-year.
While expanding the operating scale, Baidu Smart Cloud has achieved operating profits of , and , , and , year-on-year. This is attributed to the healthy growth mechanism gradually built by Baidu Smart Cloud, which is moving from low-profit margin projects and is committed to promoting the standardization of solutions.
Specifically, in the rapidly growing vertical markets such as manufacturing, energy, transportation, and government affairs, Baidu Smart Cloud occupied a favorable position in the early stage. As the IDCh report shows, Baidu Smart Cloud has won the market share of in China's industrial quality inspection solutions for three consecutive years, and continues to lead the Chinese AI industrial quality inspection market.
In intelligent traffic scenarios, Baidu intelligent networking, smart traffic management, smart highway, and smart parking solutions have helped cities such as Beijing, Guangzhou, Changsha, and Chongqing to significantly improve the efficiency of traffic. As of the end of the third quarter, based on the cumulative contract amount exceeding RMB 10 million, Baidu ACE intelligent transportation solution has been adopted by 63 cities, and its coverage continues to increase compared with 24 cities a year ago. On the one hand, the business progress of
or above is due to the fact that Baidu Smart Cloud has continuously deepened its understanding of industry-specific pain points in its long-term services for vertical industries; on the other hand, Baidu Smart Cloud has formed a set of intelligent closed-loop paths of "chip-frame-big model-industry applications" to build end-to-end solutions to better help customers achieve digital and intelligent transformation.
Baidu's success in the field of intelligent transportation proves its ability to improve the productivity of traditional industries through AI. In the future, as Baidu replicates this capability to more core industries and further participates in and empowers the transformation of the real economy, Baidu will tap into more long-term and high-quality growth space.
Baidu Apollo has deepened cooperation with leading automobile manufacturers, and the cumulative order volume of Raw Carrot Rap has reached 1.4 million orders
High-level autonomous driving technology research and development costs and long cycles. Baidu has established the world's leading L4-level autonomous driving differentiated advantage through long-term investment in the field of autonomous driving.
At present, the market demand for Baidu Apollo automotive intelligent solutions is growing, and its cumulative fixed-point and contracted amount is expected to reach 11.4 billion yuan in recent years. In the third quarter, Baidu deepened its partnership with one of China's largest auto tech companies and will apply ANP (Apollo pilot assisted driving), AVP (autonomous parking) and high-precision maps on one of its popular models, once again demonstrating the favor of automakers for Apollo autonomous driving solutions (ASD).
On the other hand, Baidu's autonomous driving travel service platform Luobu Kuaipao continues to expand its operating scale, continuing to maintain its position as the world's largest autonomous driving travel service provider. In the third quarter, Radish Express provided a total of 474,000 rides, an increase of 311% year-on-year, and increased by 465% month-on-month. As of the end of the third quarter of 2022, the cumulative number of rides provided by Radish Kuaizai to the public reached 1.4 million. Autonomous driving travel services are deeply involved in users' lives. In Beijing, Shanghai and Guangzhou, Luobu Express completes more than 15 rides per car every day.
As the business territory expands, Radish Race continues to learn and improve from new scenarios, promote technological iteration through large-scale operations, and achieve a virtuous cycle. In addition, the safety record that Radish Race continues to create on public roads will provide strong support for more cities to issue fully autonomous driving permits.
mobile ecosystem contributes strong cash flow and continues to invest in technology innovation
In terms of mobile ecosystem, Baidu still maintains year-on-year growth in operating profits, generating strong cash flow. In September, Baidu App MAU reached 634 million, a year-on-year increase of 5%. In the third quarter, the number of search queries on mobile terminal achieved double-digit growth year-on-year, and the distribution of content of Baidu App information flow increased by 23% year-on-year. In the e-commerce field, users' willingness to go to Baidu App to search for products has been further increased, and product-related search queries have continued to increase. In the third quarter, Baidu Search's quarterly GMV increased by 52% year-on-year.
Other business aspects, according to market data from IDC, Strategy Analytics and Canalys, Xiaodu continues to maintain the first place in China's smart speakers and smart screen shipments in the second quarter of 2022.
Overall, Baidu is achieving stable cash flow by controlling costs and optimizing efficiency, focusing on long-term investment in technology fields such as Baidu Smart Cloud and autonomous driving. Baidu recorded free cash flow 6.6 billion yuan in the third quarter. As of the end of the third quarter, Baidu held a total of 184.5 billion yuan in cash, cash equivalents, , restricted cash and short-term investments.
growth is driven by innovation. With the release of the scale capabilities of artificial intelligence , Baidu will open up long-term high-quality growth space and help thousands of industries enter a new stage of development.
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