Baidu Announces Second Quarter 2019 Results
BEIJING, Aug. 19, 2019 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU) ("Baidu" or the "Company"), the leading Chinese language Internet search provider, today announced its unaudited financial results for the second quarter ended June 30, 2019([1]).
"Our focus on strengthening Baidu's mobile ecosystem through knowledge-based content, BJH accounts, smart mini programs and managed pages on Baidu's platform is translating into better user experience, stronger traffic growth, and, we believe, ultimately higher conversion for our customers. In June, Baidu App DAUs reached 188 million, up 27% year over year, in-app search queries grew over 20% year over year and smart mini program MAUs reached 270 million, up 49% sequentially," said Robin Li, Baidu co-founder and CEO. "On Baidu's AI businesses, DuerOS voice assistant continues to experience strong momentum with installed base surpassing 400 million devices, up 4.5 fold year over year, and monthly voice queries surpassing 3.6 billion, up 7.5 fold year over year, in June. As mobile internet penetration in China slows, we are excited about the huge opportunity to provide content and service providers a cross-platform distribution channel beyond mobile, into smart homes and automobiles."
"Baidu delivered a solid second quarter with revenues reaching RMB 26.3 billion, growing 9% sequentially, and Baidu Core revenues growing 12% sequentially, despite the weak macro environment, our self-directed healthcare initiative, industry-specific policy changes and large influx of ad inventory." said Herman Yu, Baidu CFO. "With Baidu traffic growing robustly and our mobile ecosystem continuing to expand, we are in a good position to focus on capitalizing monetization and ROI improvement opportunities to deliver shareholder value."
Second Quarter 2019 Financial Highlights
Baidu Inc.
(in millions, except for per ADS information,
For the three-month ended
unaudited) June 30, March 31, June 30, YOY YOY[2] QOQ June 30,
2018 2019 2019 2019
RMB
RMB
RMB
US$
Total revenues 25,972 24,123 26,326 1% 6% 9% 3,835
Operating income (loss) 5,422 (936) 233 (96%) 34
Operating margin 21% (4%) 1%
Non-GAAP operating income 6,563 401 1,955 (70%) 388% 285
Non-GAAP operating margin 25% 2% 7%
Net income (loss) attributable to Baidu 6,402 (327) 2,412 (62%) 351
Net margin 25% (1%) 9%
Non-GAAP net income attributable to Baidu 7,705 967 3,635 (53%) 276% 529
Non-GAAP net margin 30% 4% 14%
Diluted earnings (loss) per ADS 18.14 (0.98) 6.57 (64%) 0.96
Non-GAAP diluted earnings per ADS 21.83 2.77 10.11 (54%) 265% 1.47
Baidu Core
---
(in millions, except for per ADS information,
For the three-month ended
unaudited) June 30, March 31, June 30, YOY YOY[2] QOQ June 30,
2018 2019 2019 2019
RMB
RMB
RMB
US$
Total revenues 20,018 17,450 19,540 (2%) 3% 12% 2,846
Operating income 6,736 1,091 2,109 (69%) 93% 307
Operating margin 34% 6% 11%
Non-GAAP operating income 7,784 2,110 3,485 (55%) 65% 508
Non-GAAP operating margin 39% 12% 18%
Net income attributable to Baidu 8,158 703 3,731 (54%) 431% 543
Net margin 41% 4% 19%
Non-GAAP net income attributable to Baidu 8,831 1,824 4,740 (46%) 160% 690
Non-GAAP net margin 44% 10% 24%
Other Highlights
Corporate
-- Forbes named Baidu one of the "50 Most Innovative Companies" in China,
recognizing Baidu Apollo for its leadership and innovation in autonomous
driving, in its July 2019 China edition. Forbes also recognized iQIYI in
the same issue for its leadership and innovation in online entertainment
in China.
-- Baidu Create, Baidu's annual AI developer conference, was held in July
2019 in Beijing, where Baidu announced the synchronized v5.0 releases of
Baidu Brain, DuerOS and Apollo. The Company also announced the
development of Baidu Honghu, an energy-efficient AI chipset to power
voice interactions in smart devices for homes and autos.
-- Over 240 million Baidu users have used Baidu Maps voice features as of
June 2019, up more than 2.5 fold from last year.
-- In the second quarter of 2019, Baidu returned $291 million to its
shareholders, increasing its accumulated return to US$778 million, under
the 2018 Share Repurchase Program. In May 2019, Baidu's Board approved
an additional US$1 billion repurchase under the 2019 Share Repurchase
Program.
Mobile Ecosystem
-- Baidu App daily active users ("DAUs") in June 2019 reached 188 million,
growing 27% year over year. In-app search is providing better user
experience through native-app like experiences with newsfeed, smart mini
programs and managed pages.
-- Baidu Smart Mini Program monthly active users ("MAUs") reached 270
million in June 2019, up 49% in three months, continuing the strong
momentum since its launch a year ago. Smart Mini Program allows Baidu to
connect users to a broad range of services and information with
native-app like experience.
-- Baijiahao ("BJH accounts"), Baidu's feed content network, grew to 2.2
million publisher accounts in June 2019, enabling influencers and media
firms to not only share their information on Baidu's newsfeed and short
video apps but also make their information fully searchable.
-- Baidu continues to improve the user experience on its platform with
Baidu AI, to identify and filter out low-quality, offensive and
inappropriate ads and other content. In the first half of 2019, Baidu's
AI filtered over one billion misleading, low-quality ad materials and
tens of billions of offensive, inappropriate images, texts, videos and
web links.
DuerOS
-- DuerOS is a leading voice assistant for the Chinese language with
installed base surpassing 400 million, up 4.5 fold year over year, and
monthly voice queries surpassing 3.6 billion, up 7.5 fold year over year
in June.
-- DuerOS skills store has released over 2,400 skills in wide-ranging
genres, including Xueersi (education), YY (live streaming), Meituan
(local services) and China Construction Bank (financial services), and
the DuerOS developer community has expanded to over 33,000 members.
-- Baidu released DuerOS v5.0, enabling capabilities of full-duplex
continued conversation, routines, home feed, home communication system
and DLNA casting, which enables video streaming from Xiaodu smart
speaker to TV through voice command.
-- Baidu recently released the following first-party DuerOS smart devices:
1) Xiaodu Smart Speaker Metal (MSRP $28) with enhanced infrared-enabled
voice control; 2) Xiaodu Smart Speaker Play (MSRP $18, for kids); and 3)
Xiaodu Smart Display 1C 4G (MSRP $100), supporting both Wi-Fi and
cellular connectivity with a rechargeable lithium battery.
-- Both Canalys and Strategy Analytics, leading global technology market
analytics firms, ranked Xiaodu smart speakers first in smart speaker
shipments in China and third globally for the first quarter of 2019.
-- Geely Auto signed a strategic partnership with Baidu to pre-install
DuerOS powered infotainment in Geely cars.
Apollo
-- In June 2019, First Automotive Works (FAW) began production of
autonomous passenger vehicles powered by Apollo for the robotaxi pilot
program in Changsha, Hunan province.
-- Baidu jointly published with BMW, Daimler, Volkswagen, Aptiv,
Continental, Intel and other top-tier industry players the first
autonomous-driving safety report in the world, Safety First for
Automated Driving Report, in July 2019.
-- Apollo's test fleet reached over 2 million test kilometers on the road
in June 2019, spanning across 13 cities, including Beijing, Changsha,
Xiong'an and Xiamen.
-- As of July 2019, Baidu received almost half of the 204 autonomous
driving pilot licenses granted in China, five times that of the next
industry player. Baidu was also the only company in China to receive T4
licenses, the highest level of autonomous driving test license issued by
the Beijing Municipal Commission of Transport, which permits autonomous
vehicles to operate in complex driving conditions, including urban
roads, tunnels, school zones and other scenarios.
Cloud & AI Platform
-- Both Canalys and Synergy Research ranked Baidu Cloud as a Top 3
China-based PaaS and IaaS public cloud service provider in their China
Public Cloud reports for the first quarter of 2019.
-- Baidu's AI Open Platform saw strong adoption in the first six months of
2019, with its developer base growing 37% to 1.3 million developer
accounts. Through Baidu's AI Open Platform on Baidu Cloud, developers
can leverage Baidu's comprehensive AI capabilities, such as speech
recognition, natural language processing and computer vision, to build
their products and solutions.
-- Developer downloads on PaddlePaddle, Baidu's open-sourced deep learning
platform, increased 45% sequentially in the second quarter of 2019.
Baidu provides advanced, easy-to-use model training toolkits for
PaddlePaddle, such as EasyDL and AI studio, to help developers build
deep learning models at scale.
iQIYI
-- iQIYI subscribers reached 100.5 million in June 2019, increasing 50%
year over year, further strengthening its foundation to offer
blockbuster original entertainment content.
Second Quarter 2019 Results
Total revenues reached RMB 26.3 billion ($3.84 billion), increasing 1% year over year, or 6% year over year, excluding the impact of announced divestures([2]), and increasing 9% quarter over quarter. Online marketing revenues were RMB19.2 billion ($2.80 billion), decreasing 9% year over year and increasing 9% quarter over quarter. Other revenues were RMB 7.1 billion ($1.03 billion), increasing 44% year over year, driven mainly by robust growth in iQIYI membership services, cloud and smart devices.
Revenue from Baidu Core reached RMB 19.5 billion ($2.85 billion), decreasing 2% year over year, or increasing 3% year over year, excluding the impact of announced divestures([2]), and increasing 12% quarter over quarter. Baidu Core's marketing services experienced softness in top sectors, including healthcare, online games, financial services, and auto/logistics sectors. Revenue from iQIYI reached RMB 7.1 billion ($1.04 billion), up 15% year over year. iQIYI membership services grew 38% year over year, while online advertising revenue fell 16% year over year.
Content costs were RMB 5.8 billion ($847 million), increasing 12% year over year, mainly due to increased investment in iQIYI content and, to a much lesser extent, in content for BJH accounts, Baidu's feed publisher network.
Traffic acquisition cost was RMB 3.4 billion ($499 million), increasing 27% year over year, as a result of higher TAC costs and expansion into offline digitalized screens and other areas.
Bandwidth costs were RMB 2.0 billion ($298 million), increasing 32% year over year, mainly due to increasing demand from feed, video and cloud services.
Other cost of revenues, which includes depreciation, operational costs, sales taxes and surcharges, and share-based compensation, was RMB 4.8 billion ($703 million), increasing 89% year over year, mainly due to higher cost of goods sold for smart home devices and higher depreciation expense.
Selling, general and administrative expenses were RMB 5.2 billion ($764 million), increasing 16% year over year, primarily due to increased investment in channel and promotional marketing, as well as the increase in personnel related expenses.
Research and development expenses were RMB 4.7 billion ($690 million), increasing 17% year over year, primarily due to the increase in personnel related expenses.
Operating income was RMB 233 million ($34 million), and operating margin was 1%. Operating income for Baidu Core was RMB 2.1 billion ($307 million), and Baidu Core operating margin was 11%. Non-GAAP operating income was RMB 2.0 billion ($285 million), and non-GAAP operating margin was 7%. Non-GAAP operating income for Baidu Core was RMB 3.5 billion ($508 million), and non-GAAP Baidu Core operating margin was 18%.
Total other income was RMB 1.2 billion ($180 million), increasing 69% year over year, mainly due to increased income from equity method investments and foreign exchange gains from RMB depreciation.
Income tax expense was RMB 416 million ($61 million), compared to RMB 1.1 billion in the second quarter of 2018. Effective tax rate was 28%, compared to 18% in the second quarter of 2018, primarily due to the lower pre-tax income from Baidu Core and iQIYI not being able to recognize tax benefit from its losses in the current period.
Net income attributable to Baidu was RMB 2.4 billion ($351 million), and net margin was 9%. Diluted earnings per ADS amounted to RMB 7 ($0.96). Net income attributable to Baidu Core was RMB 3.7 billion ($543 million), and Baidu Core net margin was 19%. Non-GAAP net income attributable to Baidu was RMB 3.6 billion ($529 million), and non-GAAP net margin was 14%. Non-GAAP diluted earnings per ADS amounted to RMB 10 ($1.47). Non-GAAP net income attributable to Baidu Core was RMB 4.7 billion ($690 million), and non-GAAP net margin for Baidu Core was 24%.
Adjusted EBITDA was RMB 3.4 billion ($489 million) and adjusted EBITDA margin was 13%. Adjusted EBITDA to Baidu Core was RMB 4.8 billion ($694 million) and Baidu Core adjusted EBITDA margin was 24%.
As of June 30, 2019, cash, cash equivalents, restricted cash and short-term investments were RMB 137.3 billion ($20.00 billion), and excluding iQIYI, cash, cash equivalents, restricted cash and short-term investments were RMB 120.9 billion ($17.61 billion). Free cash flow was RMB 5.6 billion ($817 million). Excluding iQIYI, free cash flow was RMB 4.9 billion ($710 million).
Financial Guidance
For the third quarter of 2019, Baidu expects revenues to be between RMB 26.9 billion ($3.84 billion([3])) and RMB 28.5 billion ($4.07 billion), representing -5% to 1% increase year over year, or -1% to 5% increase year over year, excluding revenues from announced divestures, and 2% to 8% increase quarter over quarter. Previously announced divestures, which were consummated in 2018, generated approximately RMB 1.0 billion revenue in the third quarter of 2018. This forecast reflects Baidu's current and preliminary view, which is subject to substantial uncertainty.
Conference Call Information
Baidu's management will hold an earnings conference call at 9:15 PM on August 19, 2019, U.S. Eastern Time (9:15 AM on August 20, 2019, Beijing/Hong Kong Time). Dial-in details for the earnings conference call are as follows:
International:
+65 67135090
Mainland China 4006208038
US:
+1 8456750437
UK:
+44 2036214779
Hong Kong:
+852 30186771
Passcode for all regions: 9480017
A replay of the conference call may be accessed by phone at the following number until August 27, 2019:
International: +61 2 8199 0299
Passcode: 9480017
Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com.
About Baidu
Baidu, Inc. is the leading Chinese language Internet search provider. Baidu aims to make a complex world simpler through technology. Baidu's ADSs trade on the NASDAQ Global Select Market under the symbol "BIDU." Currently, ten ADSs represent one Class A ordinary share.
Contacts
Investors Relations, Baidu, Inc.
Tel: +86-10-5992-8888
Email: ir@baidu.com
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the outlook for the third quarter of 2019, quotations from management in this announcement, as well as Baidu's and other parties' strategic and operational plans, contain forward-looking statements. Baidu may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Baidu's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Baidu's growth strategies; its future business development, including development of new products and services; its ability to attract and retain users and customers; competition in the Chinese Internet search and feed market; competition for online marketing customers; changes in the Company's revenues and certain cost or expense items as a percentage of its revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to intellectual property rights; the expected growth of the Chinese-language Internet search and feed market and the number of Internet and broadband users in China; Chinese governmental policies relating to the Internet and Internet search providers, and general economic conditions in China and elsewhere. Further information regarding these and other risks is included in the Company's annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of the press release, and Baidu undertakes no duty to update such information, except as required under applicable law.
Non-GAAP Financial Measures
To supplement Baidu's consolidated financial results presented in accordance with GAAP, Baidu uses the following non-GAAP financial measures: non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss) attributable to Baidu, non-GAAP net margin, non-GAAP diluted earnings per ADS, adjusted EBITDA, adjusted EBITDA margin and free cash flow. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
Baidu believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain items that may not be indicative of its recurring core business operating results, such as operating performance excluding not only non-cash charges, but also other items that are infrequent or unusual in nature. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Baidu's historical performance and liquidity. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a significant component in the Company's results of operations. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data.
Non-GAAP operating income represents operating income excluding share-based compensation expenses and amortization of intangible assets resulting from business combinations.
Non-GAAP net income attributable to Baidu represents net income attributable to Baidu excluding share-based compensation expenses, amortization of intangible assets resulting from business combinations, disposal gain or loss, impairment of long-term investments, fair value change of long-term investments, adjusted for related income tax effects. Baidu's share of equity method investments for these non-GAAP reconciling items, amortization of intangible assets not on the investees' books, accretion of their redeemable noncontrolling interests, and the gain or loss associated with the issuance of shares by the investees at a price higher or lower than the carrying value per shares, adjusted for related income tax effects, are also excluded.
Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated based on non-GAAP net income attributable to Baidu, adjusted for accretion for the redeemable noncontrolling interests. Adjusted EBITDA represents operating income excluding depreciation, amortization of intangible assets resulting from business combinations, and share-based compensation expenses. Free cash flow represents net cash provided by operating activities less capital expenditures.
For more information on non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures."
<hr/>
[1] Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.8650 to US$1.00, the effective noon buying rate as of June 28, 2019, in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. Translations are provided for the convenience of the reader.
[2] Excluding revenues from divested businesses Global DU and Du Xiaoman (financial services), which were approximately RMB1.0 billion for the three months ended June 30, 2018.
[3] The translations from RMB to U.S. dollars for the expected revenues in the third quarter of 2019 are made at a rate of RMB7.0 to US$1.0, the rounded noon buying rate as of August 8, 2019, in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at this rate, or any particular rate, or at all.
Baidu, Inc.
Condensed Consolidated Balance Sheets
(In millions except for share information, unaudited)
December 31, June 30, June 30,
2018 2019 2019
RMB RMB USD
ASSETS
Current assets:
Cash and cash equivalents 27,638 20,718 3,018
Restricted cash 2,189 2,221 324
Short-term investments 111,626 114,374 16,660
Accounts receivable, net 6,015 6,932 1,010
Amounts due from related parties 785 1,315 192
Other assets, current 6,841 9,730 1,417
Total current assets 155,094 155,290 22,621
Non-current assets:
Fixed assets, net 17,903 19,306 2,812
Intangible assets, net 9,181 8,474 1,234
Goodwill 18,536 19,096 2,782
Long-term investments, net 80,454 83,648 12,185
Amounts due from related parties 4,297 4,120 600
Deferred tax assets, net 2,324 1,637 238
Operating lease right-of-use assets 7,075 1,031
Other assets, non-current 9,777 9,949 1,449
Total non-current assets 142,472 153,305 22,331
Total assets 297,566 308,595 44,952
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans 3,046 4,017 585
Accounts payable and accrued liabilities 35,381 35,758 5,209
Customer deposits and deferred revenue 9,221 9,721 1,416
Deferred income 523 505 74
Long-term loans, current portion 84 353 51
Notes payable, current portion 6,871 5,142 749
Amounts due to related parties 1,727 1,756 256
Operating lease liabilities 2,248 327
Total current liabilities 56,853 59,500 8,667
Non-current liabilities:
Deferred income 54 33 5
Deferred revenue 1,309 1,079 157
Amounts due to related parties 4,360 4,348 634
Long-term loans 7,456 7,197 1,048
Notes payable 42,735 37,534 5,468
Convertible senior notes 4,712 11,919 1,736
Deferred tax liabilities 4,099 4,152 605
Operating lease liabilities 4,332 631
Other non-current liabilities 236 297 43
Total non-current liabilities 64,961 70,891 10,327
Total liabilities 121,814 130,391 18,994
Redeemable noncontrolling interests 716 949 138
Equity
Class A Ordinary Shares, par value US$0.00005 per share, 825,000,000 shares authorized, and 27,733,692 shares and 27,652,814 shares
issued and outstanding as at December 31, 2018 and June 30, 2019
Class B Ordinary Shares, par value US$0.00005 per share, 35,400,000 shares authorized, and 7,201,254 shares and 7,201,254 shares issued
and outstanding as at December 31, 2018 and June 30, 2019
Additional paid-in capital 33,441 36,196 5,273
Retained earnings 129,246 129,297 18,834
Accumulated other comprehensive income 210 236 34
Total Baidu shareholders' equity 162,897 165,729 24,141
Noncontrolling interests 12,139 11,526 1,679
Total equity 175,036 177,255 25,820
Total liabilities, redeemable noncontrolling interests, and equity 297,566 308,595 44,952
Baidu, Inc.
Condensed Consolidated Statements of Income (Loss)
(In millions except for share, per share (or ADS) information, unaudited)
Three Months Ended
Six Months Ended
---
June 30, March 31, June 30, June 30, June 30, June 30, June 30,
2018 2019 2019 2019 2018 2019 2019
RMB
RMB
RMB
USD(2)
RMB
RMB
USD(2)
Revenues:
Online marketing services 21,065 17,657 19,237 2,802 38,234 36,894 5,374
Others 4,907 6,466 7,089 1,033 8,645 13,555 1,975
Total revenues 25,972 24,123 26,326 3,835 46,879 50,449 7,349
Operating costs and expenses:
Content costs 5,213 6,157 5,817 847 9,407 11,974 1,744
Traffic acquisition costs 2,698 3,183 3,424 499 4,954 6,607 962
Bandwidth costs 1,550 2,040 2,048 298 3,022 4,088 595
Others 2,551 3,459 4,827 703 4,532 8,286 1,207
Cost of revenues(1) 12,012 14,839 16,116 2,347 21,915 30,955 4,508
Selling, general and administrative(1) 4,505 6,054 5,243 764 7,647 11,297 1,646
Research and development(1) 4,033 4,166 4,734 690 7,327 8,900 1,297
Total operating costs and expenses 20,550 25,059 26,093 3,801 36,889 51,152 7,451
Operating income (loss) 5,422 (936) 233 34 9,990 (703) (102)
Other income:
Interest income 882 1,072 1,205 176 1,703 2,277 332
Interest expense (478) (693) (805) (117) (830) (1,498) (218)
Foreign exchange income (loss), net 30 (313) 216 31 (18) (97) (14)
Income (loss) from equity method investment 69 (860) 429 62 (108) (431) (63)
Other income, net 231 1,694 193 28 2,087 1,887 275
Total other income (loss), net 734 900 1,238 180 2,834 2,138 312
Income (loss) before income taxes 6,156 (36) 1,471 214 12,824 1,435 210
Income taxes 1,086 294 416 61 2,206 710 104
Net income (loss) 5,070 (330) 1,055 153 10,618 725 106
Less: net income (loss) attributable to noncontrolling interests (1,332) (3) (1,357) (198) (2,478) (1,360) (198)
Net income (loss) attributable to Baidu 6,402 (327) 2,412 351 13,096 2,085 304
Earnings (loss) per ADS (1 Class A ordinary share equals 10 ADSs):
-Basic 18.32 (0.98) 6.84 1.00 37.17 5.86 0.85
-Diluted 18.14 (0.98) 6.57 0.96 36.81 5.72 0.83
Earnings (loss) per share for Class A and Class B ordinary shares:
-Basic 183.16 (9.81) 68.38 9.96 371.73 58.60 8.54
-Diluted 181.36 (9.81) 65.69 9.57 368.10 57.22 8.34
Weighted average number of Class A and Class B ordinary shares outstanding:
Basic 34,953,564 34,966,643 34,996,791 34,996,791 34,896,297 34,981,800 34,981,800
Diluted 35,299,428 34,966,643 35,044,719 35,044,719 35,240,508 35,055,695 35,055,695
(1) Includes share-based compensation expenses as follows:
Cost of revenues 60 66 99 14 95 165 24
Selling, general and administrative 302 516 503 74 593 1,019 148
Research and development 755 626 1,022 149 1,207 1,648 240
Total share-based compensation expenses 1,117 1,208 1,624 237 1,895 2,832 412
(2) All translations from RMB to U.S. dollars are made at a rate of RMB6.8650 to US$1.00, the effective noon buying rate as of June 28, 2019, in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.
Baidu, Inc.
Selected Information
(In millions except for per ADS information, unaudited)
Three months ended Three months ended
Three months ended Three months ended
June 30, 2018 (RMB) March 31, 2019 (RMB) June 30, 2019 (RMB) June 30, 2019 (USD)
---
Baidu Core iQIYI Elim & adj(3) Baidu, Inc. Baidu Core iQIYI Elim & adj(3) Baidu, Inc. Baidu Core iQIYI Elim & adj(3) Baidu, Inc. Baidu Core iQIYI Elim & adj(3) Baidu, Inc.
Total revenues 20,018 6,170 (216) 25,972 17,450 6,990 (317) 24,123 19,540 7,110 (324) 26,326 2,846 1,036 (47) 3,835
YOY (2%) 15% 1%
YOY excluding revenue from divested businesses(1) 3% 6%
QOQ 12% 2% 9%
Operating costs and expenses:
Cost of revenues (2) 6,061 6,107 (156) 12,012 7,849 7,277 (287) 14,839 9,453 6,981 (318) 16,116 1,377 1,017 (47) 2,347
Selling, general and administrative (2) 3,628 950 (73) 4,505 4,940 1,141 (27) 6,054 3,898 1,346 (1) 5,243 568 196 764
Research and development (2) 3,593 441 (1) 4,033 3,570 598 (2) 4,166 4,080 655 (1) 4,734 594 96 690
Total operating costs and expenses 13,282 7,498 (230) 20,550 16,359 9,016 (316) 25,059 17,431 8,982 (320) 26,093 2,539 1,309 (47) 3,801
YOY 31% 20% 27%
Cost of revenues 56% 14% 34%
Selling, general and administrative 7% 42% 16%
Research and development 14% 49% 17%
Operating income (loss) 6,736 (1,328) 14 5,422 1,091 (2,026) (1) (936) 2,109 (1,872) (4) 233 307 (273) 34
YOY (69%) 41% (96%)
QOQ 93% (8%)
Operating margin 34% (22%) 21% 6% (29%) (4%) 11% (26%) 1%
Total other income (loss),net 2,078 (768) (576) 734 689 211 900 1,664 (426) 1,238 242 (62) 180
Less: income taxes 1,081 5 1,086 287 7 294 410 6 416 60 1 61
Less: net income (loss) attributable to NCI (425) (4) (903) (4) (1,332) 790 (8) (785) (4) (3) (368) 23 (1,012) (4) (1,357) (54) 3 (147) (4) (198)
Net income(loss) attributable to Baidu 8,158 (2,097) 341 6,402 703 (1,814) 784 (327) 3,731 (2,327) 1,008 2,412 543 (339) 147 351
YOY (54%) 11% (62%)
QOQ 431% 28%
Net margin 41% (34%) 25% 4% (26%) (1%) 19% (33%) 9%
Other Key Metrics?
Non-GAAP operating income (loss) 7,784 (1,235) 6,563 2,110 (1,708) 401 3,485 (1,526) 1,955 508 (222) 285
YOY (55%) 24% (70%)
QOQ 65% (11%) 388%
Non-GAAP operating margin 39% (20%) 25% 12% (24%) 2% 18% (21%) 7%
Non-GAAP net income (loss) attributable to Baidu 8,831 (2,004) 7,705 1,824 (1,508) 967 4,740 (1,962) 3,635 690 (286) 529
YOY (46%) (2%) (53%)
QOQ 160% 30% 276%
Non-GAAP net margin 44% (32%) 30% 10% (22%) 4% 24% (28%) 14%
Adjusted EBITDA 8,544 (1,161) 7,397 3,372 (1,601) 1,770 4,766 (1,407) 3,355 694 (205) 489
Adjusted EBITDA margin 43% (19%) 28% 19% (23%) 7% 24% (20%) 13%
(1) Excluding revenues from divested businesses Global DU and Du Xiaoman (financial services), which were approximately RMB1.0 billion for the three months ended June 30, 2018.
(2) Includes share-based compensation as follows:
Cost of revenues 41 19 60 30 36 66 58 41 99 8 6 14
Selling, general and administrative 256 46 302 338 178 516 327 176 503 48 26 74
Research and development 736 19 755 584 42 626 959 63 1,022 140 9 149
Total share-based compensation 1,033 84 1,117 952 256 1,208 1,344 280 1,624 196 41 237
(3) Relates to intersegment eliminations and adjustments
(4) Relates to the net loss attributable to iQIYI noncontrolling interests
Baidu, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
(In millions except for ADS and per ADS information, unaudited)
Three months ended Three months ended Three months ended Three months ended
June 30, 2018 (RMB) March 31, 2019 (RMB) June 30, 2019 (RMB) June 30, 2019 (USD)
---
Baidu Core iQIYI Baidu, Inc. Baidu Core iQIYI Baidu, Inc. Baidu Core iQIYI Baidu, Inc. Baidu Core iQIYI Baidu, Inc.
Operating income (loss) 6,736 (1,328) 5,422 1,091 (2,026) (936) 2,109 (1,872) 233 307 (273) 34
Add: Share-based compensation expenses 1,033 84 1,117 952 256 1,208 1,344 280 1,624 196 41 237
Add: Amortization of intangible assets(1) 15 9 24 67 62 129 32 66 98 5 10 14
Non-GAAP operating income (loss) 7,784 (1,235) 6,563 2,110 (1,708) 401 3,485 (1,526) 1,955 508 (222) 285
Add: Depreciation of fixed assets 760 74 834 1,262 107 1,369 1,281 119 1,400 186 17 204
Adjusted EBITDA 8,544 (1,161) 7,397 3,372 (1,601) 1,770 4,766 (1,407) 3,355 694 (205) 489
Net income (loss) attributable to 8,158 (2,097) 6,402 703 (1,814) (327) 3,731 (2,327) 2,412 543 (339) 351
Add: Share-based compensation expenses 1,033 84 1,081 947 256 1,092 1,337 280 1,495 195 41 218
Add: Amortization of intangible assets(1), net of tax 11 9 17 27 49 54 8 52 37 1 8 5
Add: Disposal loss (gain), net of tax (462) 114 (31) 1 (30) (181) (181) (26) (26)
Add: Impairment of long-term investments, net of tax - 279 279 162 23 185 24 3 27
Add: Fair value change of long-term investments, net of tax (338) (338) (1,058) (1,058) (285) (1) (286) (42) (42)
Add: Reconciling items on equity method investments, net of tax(2) 429 429 957 957 (32) 11 (27) (5) 1 (4)
Non-GAAP net income (loss) attributable to 8,831 (2,004) 7,705 1,824 (1,508) 967 4,740 (1,962) 3,635 690 (286) 529
Diluted earnings (loss) per ADS 18.14 (0.98) 6.57 0.96
Add: Accretion of the redeemable noncontrolling interests 0.05 0.05 0.01
Add: Non-GAAP adjustments to earnings per ADS 3.69 3.70 3.49 0.50
Non-GAAP diluted earnings per ADS 21.83 2.77 10.11 1.47
Net cash provided by operating activities 6,972 156 7,128 1,282 379 1,661 6,074 891 6,965 885 130 1,015
Less: Capital expenditures (1,339) (166) (1,505) (2,801) (172) (2,973) (1,204) (155) (1,359) (175) (23) (198)
Free cash flow 5,633 (10) 5,623 (1,519) 207 (1,312) 4,870 736 5,606 710 107 817
(1) This represents amortization of intangible assets resulting from business combinations.
(2) This represents Baidu's share of equity method investments for other non-GAAP reconciling items, amortization of intangible assets not on the investee's books, accretion of their redeemable noncontrolling interests, and the gain or loss associated with the issuance of shares by the investees at a price higher or lower than the carrying value per shares, adjusted for related income tax
effects.
(3) Non-GAAP measures are adjusted retroactively to exclude: 1) amortization of intangible assets resulting from business combinations ; and 2) share-based compensation and amortization of intangible assets not on their books, resulting from equity method pick up; and 3) fair value change of the investees' long-term investments, net of tax, as follows:
Non-GAAP operating income, previously reported 7,769 (1,244) 6,539 2,043 (1,770) 272 3,453 (1,592) 1,857 503 (232) 271
Add: Amortization of intangible assets(1) 15 9 24 67 62 129 32 66 98 5 10 14
Non-GAAP operating income, revised 7,784 (1,235) 6,563 2,110 (1,708) 401 3,485 (1,526) 1,955 508 (222) 285
Non-GAAP net income attributable to Baidu, previously reported 8,565 (2,013) 7,433 1,524 (1,557) 640 4,418 (2,025) 3,279 643 (295) 477
Add: Adjustments relating to equity-method investments, net of tax 255 255 273 273 314 11 319 46 1 47
Add: Amortization of intangible assets(1), net of tax 11 9 17 27 49 54 8 52 37 1 8 5
Non-GAAP net income attributable to Baidu, revised 8,831 (2,004) 7,705 1,824 (1,508) 967 4,740 (1,962) 3,635 690 (286) 529
Adjusted EBITDA, previously reported 8,562 (1,125) 7,417 3,387 (1,526) 1,820 4,780 (1,348) 3,388 697 (196) 494
Less: Adjustments to amortization of intangible assets (18) (36) (20) (15) (75) (50) (14) (59) (33) (3) (9) (5)
Adjusted EBITDA, revised 8,544 (1,161) 7,397 3,372 (1,601) 1,770 4,766 (1,407) 3,355 694 (205) 489
View original content:http://www.prnewswire.com/news-releases/baidu-announces-second-quarter-2019-results-300903822.html
SOURCE Baidu, Inc.
