Baidu Announces First Quarter 2020 Results
BEIJING, May 18, 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 first quarter ended March 31, 2020([1]).
"Despite shelter-in-place in the first quarter, Baidu's total revenues declined just 7% year-over-year, resulting from our diversified revenue streams, including marketing services for wide-ranging industries, new AI businesses and iQIYI. With the pandemic coming under control in China, offline activities are rebounding and Baidu stands to benefit from a restart of the Chinese economy." said Robin Li, Co-founder and CEO of Baidu. "In March, a month after the peak of COVID-19 new cases, Baidu's traffic remained robust with Baidu App DAUs reaching 222 million, up 28% year over year, in-app search queries up 45% and feed time spent up 51%. Our strategy to strengthen Baidu's mobile ecosystem and promote in-app search has resulted in users increasingly come to Baidu for critical and reliable information."
"Given COVID-19 headwinds, Baidu focused on quality revenue growth and continued to be disciplined with spending ROI, to maximize long-term shareholder value. In the first quarter, despite Baidu Core revenue declining 13% year over year to US$2.2 billion, Baidu Core adjusted EBITDA increased 38% to reach US$0.7 billion, and adjusted EBITDA margin reached 30%, increasing 11 points from last year," said Herman Yu, CFO of Baidu. "Baidu Core's operating efficiency can be attributed to the strengthening of Baidu mobile ecosystem, enabling in-app search to grow faster and be more profitable than browser search, and growing new AI businesses with smaller losses."
First Quarter 2020 Financial Highlights
Baidu, Inc.
(In millions except per ADS,
Q1
Q4 Q1
unaudited) 2019 2019 2020 YOY QOQ
RMB
RMB
RMB US$
Total revenues 24,123 28,884 22,545 3,184 (7%) (22%)
Operating income (loss) (936) 4,655 (437) (62) (53%)
Operating income (non-GAAP) [2] 401 6,753 1,437 203 258% (79%)
Net income (loss) to Baidu (327) 6,345 41 6 (99%)
Net income to Baidu (non-GAAP) [2] 967 9,193 3,082 435 219% (66%)
Diluted earnings (loss) per ADS (0.98) 18.25 0.02 0.00 (100%)
Diluted earnings per ADS (non-GAAP) [2] 2.77 26.54 8.84 1.25 219% (67%)
Adjusted EBITDA [2] 1,770 8,175 2,852 403 61% (65%)
Adjusted EBITDA margin 7% 28% 13% 13%
Baidu Core
---
(In millions, unaudited)
Q1
Q4 Q1
2019 2019 2020 YOY QOQ
RMB
RMB
RMB US$
Total revenues 17,450 21,711 15,268 2,156 (13%) (30%)
Operating income 1,091 6,870 1,848 261 69% (73%)
Operating income (non-GAAP) [2] 2,110 8,492 3,348 473 59% (61%)
Net income to Baidu Core 703 7,433 1,698 240 142% (77%)
Net income to Baidu Core (non-GAAP) [2] 1,824 9,950 4,519 638 148% (55%)
Adjusted EBITDA[2] 3,372 9,788 4,641 656 38% (53%)
Adjusted EBITDA margin 19% 45% 30% 30%
Other Highlights
Corporate
-- Baidu retooled its AI capabilities to help users, municipalities and
health organizations better cope with the COVID-19 pandemic, as part of
Baidu's corporate social responsibility: - Baidu provided tens of
millions of free online doctor consultations on its healthcare platform
and made available its online healthcare services, such as pneumonia
screening, to third-party medical apps, to free up hospitals for
critical emergencies. - Baidu donated nearly 20,000 Xiaodu Smart
Displays to frontline doctors and their families, allowing them to use
contact-less, voice-enabled Internet and conveniently video conference
home to stay in touch with their loved ones, while minimizing virus
infection. DuerOS also partnered with online education organizations to
enable home teaching for kids, while schools were closed down. - More
than 100 Apollo-powered autonomous vehicles have been deployed across 17
cities in China, including Wuhan, Beijing, Shanghai, Shenzhen and
Xiamen, to provide medication, face mask and food deliveries, as well as
unmanned fever screening and sterilization services.- Baidu AI call
center solution was retooled to allow over 20 local governments and
health commissions to call people and survey their health conditions and
travel information. Baidu's smart call center handled over 3 million
calls in the first two months, which is equivalent to the workload of
approximately 1,000 full-time employees over a month's period. Baidu's
smart call center was also used to update the new hours of operation for
businesses on Baidu Maps, as restaurants, shops and supermarkets
re-opened for business. - Baidu open-sourced LinearFold, its RNA
analysis algorithm, to researchers worldwide for research on COVID-19.
LinearFold can accelerate the prediction time of a virus's RNA secondary
structure, potentially from 55 minutes to 27 seconds, affording
researchers an opportunity to better understand the pandemic and develop
effective vaccines.
-- Baidu released its Annual ESG Report in May 2020, which details Baidu's
ESG policies and sustainability initiatives (see the report at
http://csr.baidu.com/download.html).
-- Baidu completed a bond offering of US$1.0 billion in April 2020,
consisting of US$600 million of 3.075% notes due 2025 and US$400 million
of 3.425% notes due 2030, the proceeds from which are expected to be
used to repay maturing bonds and for general corporate use.
-- Baidu returned $185 million to shareholders in the first quarter of
2020, under the 2019 Share Repurchase Program, bringing the cumulative
repurchase total to approximately US$1.4 billion under the 2018 and 2019
Repurchase Programs.
-- Baidu's board of directors recently approved a 2020 Share Repurchase
Program effective until July 1, 2021, under which the Company may
repurchase up to US$1 billion of its shares.
Mobile Ecosystem
-- Baidu App daily active users ("DAUs") reached 222 million, up 28% year
over year, in March 2020.
-- Baijiahao ("BJH") publisher accounts reached 3.0 million, up 44% year
over year, in March 2020. More original content creators are joining
Baidu, due to the large user scale of the Baidu platform, including
Baidu App, Haokan, Quanmin and Baidu Wiki.
-- App developers are migrating to Baidu Smart Mini Program ("SMP"), which
allows users to access information and services within Baidu App and
from its network, without having to download the individual apps. Baidu
SMP monthly active users ("MAUs") on Baidu App reached 354 million, up
96% year over year, in March 2020.
DuerOS
-- In March 2020, DuerOS monthly voice queries on Xiaodu devices reached
3.3 billion, up almost 5 fold from last year, and DuerOS total monthly
voice queries reached 6.5 billion, up almost 3 fold from last year.
-- DuerOS skills store now offers over 3,800 skills in wide ranging genres,
including education, video, online game and live streaming. DuerOS
developer community has grown to over 40,000 members in March 2020.
-- DuerOS released Xiaodu Air, a 5.5-inch smart display, and Xiaodu Smart
Speaker Kids Edition, which come equipped with advanced voice features,
including allowing parents to personalize story telling with their own
voices by recording 20 sentences and enabling parents to exit children
mode through their voice prints.
-- IDC reported Xiaodu Smart Display ranked #1 in global smart display
shipments for 2019, which has also been reported by Strategy Analytics
and Canalys.
Cloud, AI Services & AI Platform
-- Baidu signed a strategic agreement with a major public utilities company
to provide AI enterprise solutions to improve customer service and
office productivity. The public utilities company leveraged Baidu's
newly launched AI PaaS (Platform-as-a-Service) to enable its customers
to purchase electricity through facial recognition at its customer
service centers, which significantly shortened queue time. Baidu AI PaaS
was also used to help the customer's employees more efficiently draft
daily and weekly management reports, by recommending report highlights
derived from relevant internal documents, using Baidu's leading
AI-powered recommendation engine.
-- Daily voice queries of Baidu IME (mobile keyboard) reached over 1
billion, increasing 185% year over year, in March 2020.
Apollo
-- Apollo continues to win smart transportation projects from
municipalities, including Hefei (Anhui Province), Yangquan (Shanxi
Province) and Chongqing, with state-of-the-art infrastructure solutions
for smart transportation.
-- Navigant Research, a well-known research firm, names Apollo as one of
the four global tier-one leaders in autonomous driving, recognizing
Baidu as the only top-tier autonomous driving company from China.
-- Apollo received top ranking in the 2019 Beijing Autonomous Vehicles Road
Test Report published by the Beijing Municipal Commission.
iQIYI
-- iQIYI subscribers reached 118.9 million, up 23% year over year, in March
2020. iQIYI's large subscriber base further strengthens iQIYI's
foundation to produce entertainment-oriented blockbuster originals.
First Quarter 2020 Results
Total revenues reached RMB 22.5 billion ($3.18 billion), decreasing 7% year over year. Online marketing revenues were RMB 14.2 billion ($2.01 billion), decreasing 19% year over year. Other revenues were RMB 8.3 billion ($1.17 billion), increasing 28% year over year, driven mainly by the strong growth in iQIYI membership, cloud service and smart devices.
Revenue from Baidu Core reached RMB 15.3 billion ($2.16 billion), decreasing 13% year over year. Revenue from iQIYI reached RMB 7.6 billion ($1.08 billion), up 9% year over year. iQIYI membership revenue grew 35% year over year, offset by online advertising revenue declining 27% year over year.
Cost of revenues was RMB 14.7 billion ($2.07 billion), decreasing 1% year over year, primarily due to a decrease in traffic acquisition costs, offset by increase in content costs and impairment of intangible assets. The decrease in traffic acquisition costs reflected decreasing union revenues, as the Company focused on growing in-app search.
Selling, general and administrative expenses were RMB 3.9 billion ($544 million), decreasing 36% 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 4.4 billion ($628 million), increasing 7% year over year, primarily due to an increase in personnel related expenses.
Operating loss was RMB 437 million ($62 million) and operating margin was -2%. Baidu Core operating income was RMB 1.8 billion ($261 million) and Baidu Core operating margin was 12%.
Non-GAAP operating income was RMB 1.4 billion ($203 million) and non-GAAP operating margin was 6%. Non-GAAP Baidu Core operating income was RMB 3.3 billion ($473 million) and non-GAAP Baidu Core operating margin was 22%.
Total other loss was RMB 1.0 billion ($146 million), compared to total other income of RMB 900 million for Q1 2019. Total other loss in Q1 2020 was mainly due to impairment losses of RMB 1.6 billion ($232 million) on long-term investments.
Income tax expense was RMB 198 million ($28 million), compared to RMB 294 million in Q1 2019.
Net income attributable to Baidu was RMB 41 million ($6 million), and diluted earnings per ADS was RMB 0.02 ($0.00). Net income attributable to Baidu Core was RMB 1.7 billion ($240 million). Non-GAAP net income attributable to Baidu was RMB 3.1 billion ($435 million), and non-GAAP net margin was 14%. Non-GAAP diluted earnings per ADS amounted to RMB 9 ($1.25). Non-GAAP net income attributable to Baidu Core was RMB 4.5 billion ($638 million), and non-GAAP net margin for Baidu Core was 30%.
Adjusted EBITDA was RMB 2.9 billion ($403 million) and adjusted EBITDA margin was 13%. Adjusted EBITDA for Baidu Core was RMB 4.6 billion ($656 million) and adjusted EBITDA margin for Baidu Core was 30%.
As of March 31, 2020, cash, cash equivalents, restricted cash and short-term investments were RMB 146.7 billion ($20.72 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB 136.7 billion ($19.31 billion). Free cash flow was RMB 1.7 billion ($233 million). Free cash flow excluding iQIYI was RMB 2.3 billion ($327 million). For more information on the adoption of ASU 2019-02 beginning January 1, 2020, in accordance with the new accounting standard, please see explanation under "Non-GAAP Financial Measures."
Financial Guidance
For the second quarter of 2020, Baidu expects revenues to be between RMB 25.0 billion ($3.5 billion) and RMB 27.3 billion ($3.9 billion), representing a growth rate of -5% to 4% year over year, which assumes that Baidu Core revenue will grow between -8% to 2% year over year. The COVID-19 situation in China is evolving, and business visibility is very limited. The above 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 May 18, 2020, U.S. Eastern Time (9:15 AM on May 19, 2020, Beijing/Hong Kong Time).
Please register in advance of the conference call using the link provided below. Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode and unique registrant ID by email.
For pre-registration, please click http://apac.directeventreg.com/registration/event/7490173. It will automatically direct you to the registration page of "Baidu Q1 2020 Earnings Conference Call", where you may fill in your details for RSVP. If it requires you to enter a participant conference ID, please enter "7490173".
In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), Direct Event passcode and unique registrant ID) provided in the confirmation email that you have received following your pre-registration.
Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com.
A replay of the conference call may be accessed by phone at the following number until May 26, 2020:
International: +61 2 8199 0299
Passcode: 7490173
About Baidu
Baidu, Inc. is a leading search engine, knowledge and information centered Internet platform and AI company. The Company's mission is to make the complicated 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 second quarter of 2020, 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 newsfeed 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 newsfeed 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 and impairment 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 and impairment 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 and impairment of intangible assets not on the investees' books, accretion of their redeemable non-controlling 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 by dividing non-GAAP net income attributable to Baidu, which is adjusted for accretion for the redeemable non-controlling interests, by the weighted average number of ordinary shares expressed in ADS. Adjusted EBITDA represents operating income excluding depreciation, amortization and impairment 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. Starting from January 1, 2020, Baidu adopted ASU 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials, which reclassifies cash outflows for costs incurred to acquire licensed contents from investing activities to operating activities. To increase comparability, 2019 free cash flow has been retrospectively adjusted to include cash outflows of acquisition of licensed copyrights, which is presented on the same basis as 2020 and going forward.
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 RMB7.0808 to
US$1.00, the exchange rate in effect
as of March 31, 2020 as set forth in
the H.10 statistical release of the
Board of Governors of the Federal
Reserve System. Translations are
provided solely for the convenience
of the reader.
[2] Non-GAAP measures are defined in
Non-GAAP Financial Measures section.
Also see the table captioned
"Reconciliations of Non-GAAP
Financial Measures to the Nearest
Comparable GAAP Measures" for more
details.
Baidu, Inc.
Condensed Consolidated Statements of Income (Loss)
(In millions except for share, per share (or ADS) information, unaudited)
Three Months Ended
March 31,
December 31, March 31, March 31,
2019 2019 2020 2020
RMB
RMB
RMB
USD
Revenues:
Online marketing services 17,657 20,765 14,243 2,011
Others 6,466 8,119 8,302 1,173
Total revenues 24,123 28,884 22,545 3,184
Operating costs and expenses:
Cost of revenues(1) 14,839 15,517 14,687 2,074
Selling, general and administrative(1) 6,054 3,956 3,852 544
Research and development(1) 4,166 4,756 4,443 628
Total operating costs and expenses 25,059 24,229 22,982 3,246
Operating income (loss) (936) 4,655 (437) (62)
Other income (loss):
Interest income 1,072 2,096 1,441 204
Interest expense (693) (674) (751) (106)
Foreign exchange income (loss), net (313) 35 (98) (13)
(Loss) gain from equity method investments (860) (94) 181 26
Other income (loss), net 1,694 (664) (1,816) (257)
Total other income (loss), net 900 699 (1,043) (146)
Income (loss) before income taxes (36) 5,354 (1,480) (208)
Income tax expense 294 304 198 28
Net income (loss) (330) 5,050 (1,678) (236)
Less: net income (loss) attributable to noncontrolling interests (3) (1,295) (1,719) (242)
Net income (loss) attributable to Baidu (327) 6,345 41 6
Earnings (loss) per ADS (1 Class A ordinary share equals 10 ADSs):
-Basic (0.98) 18.28 0.05 0.01
-Diluted (0.98) 18.25 0.02 0.00
Earnings (loss) per share for Class A and Class B ordinary shares:
-Basic (9.81) 182.82 0.52 0.07
-Diluted (9.81) 182.53 0.23 0.03
Weighted average number of Class A and Class B ordinary shares outstanding:
Basic 34,966,643 34,586,035 34,577,763 34,577,763
Diluted 34,966,643 34,613,834 34,757,943 34,757,943
(1) Includes share-based compensation expenses as follows:
Cost of revenues 66 92 81 11
Selling, general and administrative 516 413 464 66
Research and development 626 1,073 945 133
Total share-based compensation expenses 1,208 1,578 1,490 210
(2) All translations from RMB to U.S. dollars are made at a rate of RMB 7.0808 to US$1.00, the exchange rate in effect as of Mar 31, 2020 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve
System.
Baidu, Inc.
Condensed Consolidated Balance Sheets
(In millions except for share information, unaudited)
December 31, Mar 31, Mar 31,
2019 2020 2020
RMB RMB USD
ASSETS
Current assets:
Cash and cash equivalents 33,443 21,761 3,073
Restricted cash 996 1,009 142
Short-term investments 112,924 123,916 17,500
Accounts receivable, net 7,416 7,911 1,117
Amounts due from related parties 1,594 1,777 251
Other current assets, net 9,189 8,911 1,259
Total current assets 165,562 165,285 23,342
Non-current assets:
Fixed assets, net 18,311 17,175 2,426
Licensed copyrights, net 6,287 5,938 838
Intangible assets, net 1,600 1,226 173
Goodwill 18,250 18,250 2,577
Long-term investments, net 69,410 69,599 9,829
Amounts due from related parties 3,564 3,640 514
Deferred tax assets, net 2,193 2,321 328
Operating lease right-of-use assets 7,332 7,458 1,053
Other non-current assets 8,807 8,125 1,148
Total non-current assets 135,754 133,732 18,886
Total assets 301,316 299,017 42,228
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans 2,618 2,572 363
Accounts payable and accrued liabilities 32,701 31,040 4,384
Customer deposits and deferred revenue 11,062 10,829 1,529
Deferred income 529 520 73
Long-term loans, current portion 737 746 105
Notes payable, current portion 5,219 5,308 750
Amounts due to related parties 2,231 2,584 365
Operating lease liabilities 2,283 2,416 341
Total current liabilities 57,380 56,015 7,910
Non-current liabilities:
Deferred income 17 24 3
Deferred revenue 1,009 895 126
Amounts due to related parties 3,846 3,868 546
Long-term loans 7,804 7,927 1,120
Notes payable 38,090 38,740 5,471
Convertible senior notes 12,297 12,611 1,781
Deferred tax liabilities 3,273 3,179 449
Operating lease liabilities 4,486 4,463 630
Other non-current liabilities 299 482 68
Total non-current liabilities 71,121 72,189 10,194
Total liabilities 128,501 128,204 18,104
Redeemable noncontrolling interests 1,109 1,140 161
Equity
Class A Ordinary Shares, par value US$0.00005 per share, 825,000,000 shares authorized, and 27,381,621 shares and
27,265,366shares issued and outstanding as at December 31, 2019 and March 31, 2020 -
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, 2019 and March 31, 2020 -
Additional paid-in capital 38,714 39,996 5,649
Retained earnings 126,268 124,714 17,613
Accumulated other comprehensive loss (1,383) (1,664) (235)
Total Baidu shareholders' equity 163,599 163,046 23,027
Noncontrolling interests 8,107 6,627 936
Total equity 171,706 169,673 23,963
Total liabilities, redeemable noncontrolling interests, and equity 301,316 299,017 42,228
Baidu, Inc.
Selected Information
(In millions except for per ADS information, unaudited)
Three months ended
Three months ended
Three months ended Three months ended
March 31, 2019 (RMB) December31, 2019 (RMB) March 31, 2020 (RMB) March 31, 2020 (USD)
---
Baidu Core iQIYI Elim & adj(2) Baidu, Inc. Baidu Core iQIYI Elim & adj(2) Baidu, Inc. Baidu Core iQIYI Elim & adj(2) Baidu, Inc. Baidu Core iQIYI Elim & adj(2) Baidu, Inc.
Total revenues 17,450 6,990 (317) 24,123 21,711 7,497 (324) 28,884 15,268 7,650 (373) 22,545 2,156 1,080 (52) 3,184
YOY (13%) 9% (7%)
QOQ (30%) 2% (22%)
Operating costs and expenses:
Cost of revenues (1) 7,849 7,277 (287) 14,839 8,215 7,914 (612) 15,517 7,088 7,903 (304) 14,687 1,001 1,116 (43) 2,074
Selling, general and administrative (1) 4,940 1,141 (27) 6,054 2,575 1,400 (19) 3,956 2,560 1,311 (19) 3,852 362 185 (3) 544
Research and development (1) 3,570 598 (2) 4,166 4,051 711 (6) 4,756 3,772 678 (7) 4,443 532 96 628
Total operating costs and expenses 16,359 9,016 (316) 25,059 14,841 10,025 (637) 24,229 13,420 9,892 (330) 22,982 1,895 1,397 (46) 3,246
YOY (18%) 10% (8%)
Cost of revenues (10%) 9% (1%)
Selling, general and administrative (48%) 15% (36%)
Research and development 6% 13% 7%
Operating income (loss) 1,091 (2,026) (1) (936) 6,870 (2,528) 313 4,655 1,848 (2,242) (43) (437) 261 (317) (6) (62)
YOY 69% 11% (53%)
QOQ (73%) (11%)
Operating margin 6% (29%) (4%) 32% (34%) 16% 12% (29%) (2%)
Add: total other income (loss),net 689 211 900 624 75 699 (414) (629) (1,043) (58) (88) (146)
Less: income tax expense 287 7 294 281 23 304 193 5 198 27 1 28
Less: net income (loss) attributable to NCI 790 (8) (785) (3) (3) (220) 18 (1,093) (3) (1,295) (457) (1) (1,261) (3) (1,719) (64) (178) (3) (242)
Net income(loss) attributable to Baidu 703 (1,814) 784 (327) 7,433 (2,494) 1,406 6,345 1,698 (2,875) 1,218 41 240 (406) 172 6
YOY 142% 58%
QOQ (77%) 15% (99%)
Net margin 4% (26%) (1%) 34% (33%) 22% 11% (38%) 0%
Other Key Metrics?
Operating income (loss) (non-GAAP) 2,110 (1,708) 401 8,492 (2,052) 6,753 3,348 (1,868) 1,437 473 (264) 203
YOY 59% 9% 258%
QOQ (61%) (9%) (79%)
Non-GAAP operating margin 12% (24%) 2% 39% (27%) 23% 22% (24%) 6%
Net income (loss) attributable to Baidu (non-GAAP) 1,824 (1,508) 967 9,950 (1,901) 9,193 4,519 (2,482) 3,082 638 (351) 435
YOY 148% 65% 219%
QOQ (55%) 31% (66%)
Non-GAAP net margin 10% (22%) 4% 46% (25%) 32% 30% (32%) 14%
Adjusted EBITDA 3,372 (1,601) 1,770 9,788 (1,926) 8,175 4,641 (1,746) 2,852 656 (247) 403
YOY 38% 9% 61%
QOQ (53%) (9%) (65%)
Adjusted EBITDA margin 19% (23%) 7% 45% (26%) 28% 30% (23%) 13%
(1) Includes share-based compensation as follows:
Cost of revenues 30 36 66 43 49 92 34 47 81 5 6 11
Selling, general and administrative 338 178 516 220 193 413 273 191 464 39 27 66
Research and development 584 42 626 1,001 72 1,073 877 68 945 123 10 133
Total share-based compensation 952 256 1,208 1,264 314 1,578 1,184 306 1,490 167 43 210
(2) Relates to intersegment eliminations and adjustments
(3) Relates to the net loss attributable to iQIYI noncontrolling interests
Baidu, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions,unaudited)
Three months ended Three months ended Three months ended Three months ended
March 31, 2019 (RMB) December 31, 2019 (RMB) March 31, 2020 (RMB) March 31, 2020 (USD)
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Baidu excl. iQIYI iQIYI Baidu, Inc. Baidu excl. iQIYI iQIYI Baidu, Inc. Baidu excl. iQIYI iQIYI Baidu, Inc. Baidu excl. iQIYI iQIYI Baidu, Inc.
Net cash provided by (used in) operating activities 1,282 379 1,661 8,688 2,343 11,031 2,801 (604) 2,197 395 (85) 310
Net cash provided by (used in) investing activities (3,746) (902) (4,648) 10,194 (2,089) 8,105 (11,084) (1,610) (12,694) (1,566) (227) (1,793)
Net cash provided by (used in) financing activities 153 7,926 8,079 (1,181) (259) (1,440) (1,296) (79) (1,375) (183) (11) (194)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (214) (138) (352) (254) (178) (432) 139 64 203 20 9 29
Net increase (decrease) in cash, cash equivalents and restricted cash (2,525) 7,265 4,740 17,447 (183) 17,264 (9,440) (2,229) (11,669) (1,334) (314) (1,648)
Cash, cash equivalents and restricted cash
At beginning of period 23,067 6,760 29,827 10,082 7,093 17,175 27,529 6,910 34,439 3,887 976 4,863
At end of period 20,542 14,025 34,567 27,529 6,910 34,439 18,089 4,681 22,770 2,553 662 3,215
Net cash provided by (used in) operating activities 1,282 379 1,661 8,688 2,343 11,031 2,801 (604) 2,197 395 (85) 310
Less: Capital expenditures (2,801) (172) (2,973) (652) (232) (884) (478) (67) (545) (68) (9) (77)
Less: Acquisition of licensed copyrights(1) (49) (2,706) (2,755) (54) (3,656) (3,710) -
Free cash flow (1,568) (2,499) (4,067) 7,982 (1,545) 6,437 2,323 (671) 1,652 327 (94) 233
Note: Baidu excl. iQIYI represents Baidu, Inc. minus iQIYI's consolidated cash flows.
(1) Starting from January 1, 2020, Baidu adopted ASU 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials, which reclassifies cash outflows for costs incurred to acquire licensed contents from investing activities to operating activities. To increase comparability, 2019 non-GAAP measure of free cash flow has been retrospectively
adjusted to include cash outflows of acquisition of licensed copyrights, which is presented on the same basis as 2020 and going forward.
Free cash flow, previously reported (1,519) 207 (1,312) 8,036 2,111 10,147 2,323 2,056 4,379 327 290 617
Less: Acquisition of licensed copyrights (49) (2,706) (2,755) (54) (3,656) (3,710) (2,727) (2,727) (384) (384)
Free cash flow, revised (1,568) (2,499) (4,067) 7,982 (1,545) 6,437 2,323 (671) 1,652 327 (94) 233
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
March 31, 2019 (RMB) December 31, 2019 (RMB) March 31, 2020 (RMB) March 31, 2020 (USD)
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Baidu Core iQIYI Baidu, Inc. Baidu Core iQIYI Baidu, Inc. Baidu Core iQIYI Baidu, Inc. Baidu Core iQIYI Baidu, Inc.
Operating income (loss) 1,091 (2,026) (936) 6,870 (2,528) 4,655 1,848 (2,242) (437) 261 (317) (62)
Add: Share-based compensation expenses 952 256 1,208 1,264 314 1,578 1,184 306 1,490 167 43 210
Add: Amortization and impairment of intangible assets(1) 67 62 129 358 162 520 316 68 384 45 10 55
Operating income (loss) (non-GAAP) 2,110 (1,708) 401 8,492 (2,052) 6,753 3,348 (1,868) 1,437 473 (264) 203
Add: Depreciation of fixed assets 1,262 107 1,369 1,296 126 1,422 1,293 122 1,415 183 17 200
Adjusted EBITDA 3,372 (1,601) 1,770 9,788 (1,926) 8,175 4,641 (1,746) 2,852 656 (247) 403
Net income (loss) attributable to Baidu 703 (1,814) (327) 7,433 (2,494) 6,345 1,698 (2,875) 41 240 (406) 6
Add: Share-based compensation expenses 947 256 1,092 1,257 314 1,433 1,177 306 1,348 166 43 190
Add: Amortization and impairment of intangible assets(1)(3) 27 49 54 15 131 88 143 54 173 20 8 25
Add: Disposal loss (gain)(3) (31) 1 (30) 445 445 (252) (252) (36) (36)
Add: Impairment of long-term investments(3) 279 279 465 141 544 1,528 24 1,542 216 3 218
Add: Fair value change of long-term investments(3) (1,058) (1,058) (60) (1) (61) (176) (176) (25) (25)
Add: Reconciling items on equity method investments(2) 957 957 395 8 399 401 9 406 57 1 57
Net income (loss) attributable to Baidu (non-GAAP) 1,824 (1,508) 967 9,950 (1,901) 9,193 4,519 (2,482) 3,082 638 (351) 435
Diluted earnings (loss) per ADS (0.98) 18.25 0.02 0.00
Add: Accretion of the redeemable noncontrolling interests 0.05 0.06 0.07 0.01
Add: Non-GAAP adjustments to earnings per ADS 3.70 8.23 8.75 1.24
Diluted earnings per ADS (non-GAAP) 2.77 26.54 8.84 1.25
(1) This represents amortization and impairment of intangible assets resulting from business combinations.
(2) This represents Baidu's share of equity method investments for other non-GAAP reconciling items, amortization and impairment 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) Net of related tax impact
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SOURCE Baidu, Inc.
