Chronicle Journal: Finance

Baidu Announces Second Quarter 2020 Results

BEIJING, Aug. 13, 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 second quarter ended June 30, 20201.

"With COVID-19 becoming more manageable in China, Baidu's business is steadily rebounding. We are pleased that in-app revenue grew in the second quarter, despite a challenging macro environment, further validating our strategy to make Baidu App a super app through AI-powered building blocks and marketing cloud platform." said Robin Li, Co-founder and CEO of Baidu. "Baidu's new AI businesses, including cloud, smart devices and smart transportation, saw double-digit growth in the second quarter and stand to become an important revenue driver in the years to come."

"In addition to investing in new AI businesses, Baidu is also diversifying our revenue streams through membership, online games and others to increase the ARPU of our existing traffic." said Herman Yu, CFO of Baidu. "The healthy growth of Baidu App and new AI businesses have enabled Baidu Core's adjusted EBITDA margin to reach 41% in the second quarter. We plan to continue heavy investments in technology to maximize Baidu's future growth potential."

Second Quarter 2020 Financial Highlights




Baidu, Inc.

(In millions except per ADS,

Q2


Q1


Q2





unaudited)

2019


2020


2020


YOY


QOQ


RMB


RMB


RMB

US$





Total revenues

26,326


22,545


26,034

3,685


(1%)


15%












Operating income (loss)

233


(437)


3,644

516


1464%


-

Operating income (non-GAAP) 2

1,955


1,437


5,605

793


187%


290%












Net income to Baidu

2,412


41


3,579

507


48%


8629%

Net income to Baidu (non-GAAP) 2

3,635


3,082


5,082

719


40%


65%












Diluted earnings per ADS

6.57


0.02


10.31

1.46


57%


51450%

Diluted earnings per ADS (non-GAAP) 2

10.11


8.84


14.73

2.08


46%


67%












Adjusted EBITDA 2

3,355


2,852


7,015

993


109%


146%

Adjusted EBITDA margin

13%


13%


27%

27%


















Baidu Core

(In millions, unaudited)

Q2


Q1


Q2






2019


2020


2020


YOY


QOQ


RMB


RMB


RMB

US$





Total revenues

19,540


15,268


18,926

2,679


(3%)


24%












Operating income

2,109


1,848


4,966

703


135%


169%

Operating income (non-GAAP) 2

3,485


3,348


6,482

917


86%


94%












Net income to Baidu Core

3,731


1,698


4,424

626


19%


161%

Net income to Baidu Core (non-GAAP) 2

4,740


4,519


5,656

801


19%


25%












Adjusted EBITDA2

4,766


4,641


7,771

1,100


63%


67%

Adjusted EBITDA margin

24%


30%


41%

41%





Other Highlights
Corporate

  • As part of corporate social responsibilities, Baidu is partnering with healthcare professionals and government organizations to tackle public health risks and improve the quality of life, using Baidu AI for public health monitoring, drug development and disease diagnosis. Baidu AI healthcare solutions have been adopted by nearly 2,000 hospitals and primary healthcare institutions across 27 provinces.
  • Baidu returned US$540 million to shareholders under the 2020 Share Repurchase Program in the second quarter, bringing the Company's cumulative repurchase for the last two years to approximately US$1.9 billion.
  • Baidu's board of directors recently approved a change to the 2020 Share Repurchase Program, increasing the repurchase authorization from US$1 billion to US$3 billion, which is effective through December 31, 2022.

Mobile Ecosystem

  • Baidu App daily active users ("DAUs") reached 204 million in June 2020, adding 16 million users in the last 12 months.
  • As a leading Internet platform for content and services, Baidu has attracted a large variety of knowledge and information-based videos to its platform, including live and short videos. Over 800 sessions of topical live streaming were broadcasted in the second quarter, with sessions like Baidu Wiki Virtual Zoo, Summer Art Festival and Wandering through Civilization Season 2, attracting over 40,000,000 views.
  • Baijiahao ("BJH") publisher accounts reached 3.4 million, up 52% year over year, in June 2020. The large scale of Baidu's platform is drawing more original content creators to join BJH, which allows easy sharing of content across Baidu App, Haokan, Quanmin and Baidu's full set of knowledge products.
  • Baidu Smart Mini Program ("SMP") is becoming more lively with the number of SMPs joining Baidu's network growing over five folds in the last year, and SMP monthly active users ("MAUs") on Baidu App reaching 339 million, up 25% year over year. App developers are migrating to SMP, which enables users native-app like, closed-loop experience on third-party content and services, without having to leave Baidu and download the host apps.
  • Revenue from Baidu Managed Page increased to approximately 30% of Baidu Core's online marketing services revenue in the second quarter of 2020. Merchants with HTML5 websites across many industries are switching to Managed Page, as the landing page for their search results.

DuerOS

  • In June 2020, DuerOS monthly voice queries on Xiaodu devices reached 2.8 billion, nearly doubling from last year, and DuerOS total monthly voice queries reached 5.8 billion, up 57% from last year.
  • DuerOS skills store now offers 4,000 skills in wide ranging genres, including education, video, online game and live streaming. DuerOS developer community has grown to over 42,000 members.
  • JD.com announced that Xiaodu series of smart displays and smart speakers was the best-selling in the smart speaker category on its platform during this year's June 18 Shopping Festival.

Cloud, AI Services & AI Platform 

  • Baidu formed a strategic partnership with China National Building Materials Group (CNBM Group), the parent of 13 listed companies. CNBM Group plans to use Baidu AI PaaS, equipped with big data and IoT edge computing capabilities, to provide intelligent logistics, intelligent factory and industrial autonomous driving. For example, CNBM Group plans to use Baidu AI PaaS paired with Baidu intelligent map to improve the routing efficiency of its logistics vehicles and track the vehicles whereabouts to optimize operational costs and increase traffic safety.
  • Baidu's AI open platform, built on top of Baidu Cloud, offers over 260 AI capabilities, which are tapped by over 2.1 million developers.
  • At the World Artificial Intelligence Conference, Baidu's natural language processing framework ERNIE (Enhanced Representation through kNowledge IntEgration) earned the distinction of the SAIL (Super AI Leader) Award, recognizing inspiring technology breakthroughs, application innovations and AI projects that change people's lives.

Apollo

  • The Apollo robotaxi operations in Beijing, Changsha and Cangzhou have expanded into larger networks and more complex road conditions, such as downtown streets.
  • In May 2020, Baidu completed the 145,000 square feet Apollo Park in Beijing, an autonomous driving and V2X testing facility that supports testing, operational command center, cloud control system, vehicle warehousing, maintenance and calibration.

iQIYI

  • iQIYI subscribers reached 104.9 million, up 4% year over year, in June 2020, and membership revenue was up 19% year over year. iQIYI's large subscriber base further strengthens iQIYI's foundation to produce entertainment blockbuster originals.

Second Quarter 2020 Results
Total revenues reached RMB 26.0 billion ($3.69 billion), decreasing 1% year over year. Online marketing revenues were RMB 17.7 billion ($2.50 billion), decreasing 8% year over year. Other revenues were RMB 8.3 billion ($1.18 billion), increasing 18% year over year, driven by the strong growth of iQIYI membership and Baidu's cloud and smart transportation solutions. 

Revenue from Baidu Core reached RMB 18.9 billion ($2.68 billion), decreasing 3% year over year. Revenue from iQIYI reached RMB 7.4 billion ($1.05 billion), up 4% year over year. iQIYI membership revenue grew 19% year over year, partially offset by online advertising revenue declining 28% year over year.

Cost of revenues was RMB 13.1 billion ($1.86 billion), decreasing 19% year over year, primarily due to a decrease in traffic acquisition costs, sales tax and surcharges, and costs of goods sold. The decrease in traffic acquisition costs reflected decreasing union revenues, as the Company focused on optimizing profitability over revenue growth.

Selling, general and administrative expenses were RMB 4.4 billion ($625 million), decreasing 16% year over year, primarily due to decreased marketing spending and personnel related expenses.

Research and development expenses were RMB 4.8 billion ($685 million), increasing 2% year over year.

Operating income was RMB 3.6 billion ($516 million) and operating margin was 14%. Baidu Core operating income was RMB 5.0 billion ($703 million) and Baidu Core operating margin was 26%.

Non-GAAP operating income was RMB 5.6 billion ($793 million), and non-GAAP operating margin was 22%. Non-GAAP Baidu Core operating income was RMB 6.5 billion ($917 million), and non-GAAP Baidu Core operating margin was 34%. 

Total other income was RMB 366 million ($53 million), decreasing 70% year over year, primarily due to loss from equity method investments, which is booked a quarter in arrears and reflects the impact of COVID-19 on its investees.

Income tax expense was RMB 1.2 billion ($174 million), which included tax withholding accrual for dividend distribution to offshore entities, compared to RMB 416 million in Q2 2019.

Net income attributable to Baidu was RMB 3.6 billion ($507 million), and diluted earnings per ADS was RMB 10.31 ($1.46). Net income attributable to Baidu Core was RMB 4.4 billion ($626 million). Non-GAAP net income attributable to Baidu was RMB 5.1 billion ($719 million), and non-GAAP net margin was 20%. Non-GAAP diluted earnings per ADS amounted to RMB 14.73 ($ 2.08). Non-GAAP net income attributable to Baidu Core was RMB 5.7 billion ($801 million), and non-GAAP net margin for Baidu Core was 30%.

Adjusted EBITDA was RMB 7.0 billion ($993 million) and adjusted EBITDA margin was 27%. Adjusted EBITDA for Baidu Core was RMB 7.8 billion ($1.1 billion) and adjusted EBITDA margin for Baidu Core was 41%. 

As of June 30, 2020, cash, cash equivalents, restricted cash and short-term investments were RMB 154.1 billion ($21.80 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB 144.6 billion ($20.46 billion). Free cash flow was RMB 7.3 billion ($1.04 billion). Free cash flow excluding iQIYI was RMB 8.8 billion ($1.24 billion).

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 third quarter of 2020, Baidu expects revenues to be between RMB 26.3 billion ($3.7 billion) and RMB 28.7 billion ($4.1 billion), representing a growth rate of -6% to 2% year over year, which assumes that Baidu Core revenue will grow between -7% and 3% 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 August 13, 2020, U.S. Eastern Time (9:15 AM on August 14, 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/2568424. It will automatically direct you to the registration page of "Baidu Q2 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 "2568424".

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 August 21, 2020:

International:

+61 2 8199 0299

Passcode:

2568424

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 third 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."

1 Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.0651 to US$1.00, the exchange rate in effect as of June 30, 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


Six Months Ended



June 30,


March 31,


June 30,


June 30,


June 30,


June 30,


June 30,



2019


2020


2020


2020


2019


2020


2020



RMB


RMB


RMB


US$(2)


RMB


RMB


US$(2)

 Revenues: 















 Online marketing services 


19,237


14,243


17,688


2,504


36,894


31,931


4,520

 Others 


7,089


8,302


8,346


1,181


13,555


16,648


2,355

 Total revenues  


26,326


22,545


26,034


3,685


50,449


48,579


6,875
















 Costs and expenses: 















     Cost of revenues(1)


16,116


14,687


13,134


1,859


30,955


27,821


3,938

     Selling, general and administrative(1)


5,243


3,852


4,417


625


11,297


8,269


1,170

     Research and development(1)


4,734


4,443


4,839


685


8,900


9,282


1,313

 Total costs and expenses 


26,093


22,982


22,390


3,169


51,152


45,372


6,421

 Operating income (loss) 


233


(437)


3,644


516


(703)


3,207


454
















 Other income (loss): 















 Interest income 


1,205


1,441


1,312


186


2,277


2,753


390

 Interest expense 


(805)


(751)


(820)


(116)


(1,498)


(1,571)


(222)

 Foreign exchange income (loss), net 


216


(98)


55


8


(97)


(43)


(6)

 Gain (loss) from equity method investments 


429


181


(1,732)


(245)


(431)


(1,551)


(220)

 Other income (loss), net 


193


(1,816)


1,551


220


1,887


(265)


(37)

 Total other income (loss), net 


1,238


(1,043)


366


53


2,138


(677)


(95)
















 Income (loss) before income taxes 


1,471


(1,480)


4,010


569


1,435


2,530


359

 Income tax expense 


416


198


1,222


174


710


1,420


201

 Net income (loss) 


1,055


(1,678)


2,788


395


725


1,110


158

 Net loss attributable to noncontrolling interests 


(1,357)


(1,719)


(791)


(112)


(1,360)


(2,510)


(355)

 Net income attributable to Baidu 


2,412


41


3,579


507


2,085


3,620


513































Earnings per ADS (1 Class A ordinary share equals 10 ADSs):













 -Basic


6.84


0.05


10.34


1.46


5.86


10.37


1.47

 -Diluted


6.57


0.02


10.31


1.46


5.72


10.32


1.46

Earnings per share for Class A and Class B ordinary shares:













 -Basic


68.38


0.52


103.44


14.64


58.60


103.66


14.67

 -Diluted


65.69


0.23


103.06


14.59


57.22


103.20


14.61

Weighted average number of Class A and Class B ordinary shares outstanding:











Basic 


34,996,791


34,577,763


34,377,658


34,377,658


34,981,800


34,477,710


34,477,710

Diluted


35,044,719


34,757,943


34,505,617


34,505,617


35,055,695


34,631,780


34,631,780
















(1)  Includes share-based compensation expenses as follows:













 Cost of revenues 


99


81


108


15


165


189


27

 Selling, general and administrative 


503


464


550


78


1,019


1,014


144

 Research and development 


1,022


945


1,188


168


1,648


2,133


302

 Total share-based compensation expenses 


1,624


1,490


1,846


261


2,832


3,336


473
















(2)  All translations from RMB to U.S. dollars are made at a rate of RMB 7.0651 to US$1.00, the exchange rate in effect as of June 30, 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,


June 30,


June 30,



2019


2020


2020



RMB


RMB


US$

ASSETS







    Current assets:







 Cash and cash equivalents


33,443


20,349


2,880

 Restricted cash


996


1,528


216

 Short-term investments


112,924


132,174


18,708

 Accounts receivable, net


7,416


6,706


949

 Amounts due from related parties


1,594


1,637


232

 Other current assets, net


9,189


9,654


1,366

    Total current assets


165,562


172,048


24,351








    Non-current assets:







 Fixed assets, net


18,311


16,894


2,391

 Licensed copyrights, net


6,287


5,743


813

 Intangible assets, net


1,600


1,633


231

 Goodwill


18,250


18,767


2,656

 Long-term investments, net


69,410


68,625


9,713

 Amounts due from related parties


3,564


3,585


507

 Deferred tax assets, net


2,193


1,399


198

 Operating lease right-of-use assets


7,332


7,352


1,041

 Other non-current assets


8,807


8,422


1,193

    Total non-current assets


135,754


132,420


18,743








Total assets


301,316


304,468


43,094








LIABILITIES AND EQUITY







   Current liabilities:







      Short-term loans


2,618


3,619


512

Accounts payable and accrued liabilities


32,701


31,986


4,527

Customer deposits and deferred revenue


11,062


11,601


1,642

Deferred income


529


507


72

Long-term loans, current portion


737


7,506


1,062

Notes payable, current portion


5,219


-


-

Amounts due to related parties


2,231


2,850


403

Operating lease liabilities


2,283


2,379


337

    Total current liabilities


57,380


60,448


8,555








    Non-current liabilities:







Deferred income


17


44


6

Deferred revenue


1,009


756


107

Amounts due to related parties


3,846


3,853


545

Long-term loans


7,804


887


126

Notes payable


38,090


45,681


6,466

Convertible senior notes


12,297


12,694


1,797

Deferred tax liabilities


3,273


3,511


497

Operating lease liabilities


4,486


4,404


623

Other non-current liabilities


299


394


57

    Total non-current liabilities


71,121


72,224


10,224








Total liabilities


128,501


132,672


18,779








Redeemable noncontrolling interests


1,109


1,173


166








Equity







    Total Baidu shareholders' equity


163,599


164,509


23,284

    Noncontrolling interests


8,107


6,114


865

Total equity


171,706


170,623


24,149








Total liabilities, redeemable noncontrolling
interests, and equity


301,316


304,468


43,094

 

 

Baidu, Inc. 

























Selected Information

























(In millions except for per ADS information, unaudited)


















































Three months ended
June 30, 2019 (RMB)


Three months ended
March 31, 2020 (RMB)


Three months ended
June 30, 2020 (RMB)


Three months ended
June 30, 2020 (US$)



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 


19,540

7,110

(324)


26,326


15,268

7,650

(373)


22,545


18,926

7,412

(304)


26,034


2,679

1,049

(43)


3,685

  YOY














(3%)

4%



(1%)







  QOQ














24%

(3%)



15%
































Costs and expenses: 

























  Cost of revenues (1)


9,453

6,981

(318)


16,116


7,088

7,903

(304)


14,687


6,555

6,834

(255)


13,134


928

967

(36)


1,859

  Selling, general and administrative (1)


3,898

1,346

(1)


5,243


2,560

1,311

(19)


3,852


3,230

1,196

(9)


4,417


457

169

(1)


625

  Research and development (1)


4,080

655

(1)


4,734


3,772

678

(7)


4,443


4,175

664

-


4,839


591

94

-


685

Total costs and expenses 


17,431

8,982

(320)


26,093


13,420

9,892

(330)


22,982


13,960

8,694

(264)


22,390


1,976

1,230

(37)


3,169

  YOY 

























  Cost of revenues 














(31%)

(2%)



(19%)







  Selling, general and administrative 














(17%)

(11%)



(16%)







  Research and development 














2%

1%



2%







  Cost and expenses














(20%)

(3%)



(14%)
































Operating income (loss)


2,109

(1,872)

(4)


233


1,848

(2,242)

(43)


(437)


4,966

(1,282)

(40)


3,644


703

(181)

(6)


516

  YOY














135%

(32%)



1464%







  QOQ














169%

(43%)



-







Operating margin 


11%

(26%)



1%


12%

(29%)



(2%)


26%

(17%)



14%
































  Add: total other income (loss),net


1,664

(426)

-


1,238


(414)

(629)

-


(1,043)


507

(141)

-


366


73

(20)

-


53

  Less: income tax expense


410

6



416


193

5

-


198


1,206

16

-


1,222


172

2

-


174

  Less: net income (loss) attributable to NCI


(368)

23

(1,012)

(3)

(1,357)


(457)

(1)

(1,261)

(3)

(1,719)


(157)

3

(637)

(3)

(791)


(22)

-

(90)

(3)

(112)

Net income(loss) attributable to Baidu


3,731

(2,327)

1,008


2,412


1,698

(2,875)

1,218


41


4,424

(1,442)

597


3,579


626

(203)

84


507

  YOY














19%

(38%)



48%







  QOQ














161%

(50%)



8629%







Net margin 


19%

(33%)



9%


11%

(38%)



0%


23%

(19%)



14%
































Non-GAAP financial measures:

























Operating income (loss) (non-GAAP)


3,485

(1,526)



1,955


3,348

(1,868)



1,437


6,482

(837)



5,605


917

(118)



793

  YOY














86%

(45%)



187%







  QOQ














94%

(55%)



290%







Operating margin (non-GAAP)


18%

(21%)



7%


22%

(24%)



6%


34%

(11%)



22%
































Net income (loss) attributable to Baidu
(non-GAAP)


4,740

(1,962)



3,635


4,519

(2,482)



3,082


5,656

(956)



5,082


801

(135)



719

  YOY














19%

(51%)



40%







  QOQ














25%

(61%)



65%







Net margin (non-GAAP)


24%

(28%)



14%


30%

(32%)



14%


30%

(13%)



20%
































Adjusted EBITDA


4,766

(1,407)



3,355


4,641

(1,746)



2,852


7,771

(716)



7,015


1,100

(101)



993

  YOY














63%

(49%)



109%







  QOQ














67%

(59%)



146%







Adjusted EBITDA margin 


24%

(20%)



13%


30%

(23%)



13%


41%

(10%)



27%
































(1)  Includes share-based compensation as follows:























 Cost of revenues 


58

41



99


34

47



81


49

59



108


7

8



15

 Selling, general and administrative 


327

176



503


273

191



464


331

219



550


47

31



78

 Research and development 


959

63



1,022


877

68



945


1,102

86



1,188


156

12



168

 Total share-based compensation 


1,344

280



1,624


1,184

306



1,490


1,482

364



1,846


210

51



261

 (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 



June 30, 2019 (RMB)


March 31, 2020 (RMB)


June 30, 2020 (RMB)


June 30, 2020 (US$)



 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


6,074

891

6,965


2,801

(604)

2,197


9,547

(1,358)

8,189


1,351

(192)

1,159

Net cash provided by (used in) investing activities 


(2,713)

(7,836)

(10,549)


(11,084)

(1,610)

(12,694)


(8,854)

1,144

(7,710)


(1,254)

162

(1,092)

Net cash provided by (used in) financing activities


(8,822)

373

(8,449)


(1,296)

(79)

(1,375)


(2,211)

823

(1,388)


(312)

116

(196)

Effect of exchange rate changes on cash, cash
equivalents and restricted cash


235

170

405


139

64

203


26

(10)

16


3

(1)

2

Net increase (decrease) in cash, cash
equivalents and restricted cash 


(5,226)

(6,402)

(11,628)


(9,440)

(2,229)

(11,669)


(1,492)

599

(893)


(212)

85

(127)

Cash, cash equivalents and restricted cash

















  At beginning of period


20,541

14,026

34,567


27,529

6,910

34,439


18,089

4,681

22,770


2,560

663

3,223

  At end of period


15,315

7,624

22,939


18,089

4,681

22,770


16,597

5,280

21,877


2,348

748

3,096


















Net cash provided by (used in) operating
activities


6,074

891

6,965


2,801

(604)

2,197


9,547

(1,358)

8,189


1,351

(192)

1,159

Less: Capital expenditures


(1,204)

(155)

(1,359)


(478)

(67)

(545)


(797)

(57)

(854)


(113)

(8)

(121)

Less: Acquisition of licensed copyrights(1)


(41)

(2,906)

(2,947)


-

-

-


-

-

-


-

-

-

Free cash flow


4,829

(2,170)

2,659


2,323

(671)

1,652


8,750

(1,415)

7,335


1,238

(200)

1,038



































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


4,870

736

5,606


2,323

2,056

4,379


8,750

1,290

10,040


1,238

183

1,421

Less: Acquisition of licensed copyrights


(41)

(2,906)

(2,947)


-

(2,727)

(2,727)


-

(2,705)

(2,705)


-

(383)

(383)

Free cash flow, revised


4,829

(2,170)

2,659


2,323

(671)

1,652


8,750

(1,415)

7,335


1,238

(200)

1,038

 

 

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, 2019 (RMB)


March 31, 2020 (RMB)


June 30, 2020 (RMB)


June 30, 2020 (US$)



Baidu
Core

iQIYI

Baidu,
Inc.


Baidu
Core

iQIYI

Baidu,
Inc.


Baidu
Core

iQIYI

Baidu,
Inc.


Baidu
Core

iQIYI

Baidu,
Inc.

Operating income (loss)


2,109

(1,872)

233


1,848

(2,242)

(437)


4,966

(1,282)

3,644


703

(181)

516

Add:  Share-based compensation expenses


1,344

280

1,624


1,184

306

1,490


1,482

364

1,846


210

51

261

Add:  Amortization and impairment of intangible assets(1)


32

66

98


316

68

384


34

81

115


4

12

16

Operating income (loss) (non-GAAP)


3,485

(1,526)

1,955


3,348

(1,868)

1,437


6,482

(837)

5,605


917

(118)

793


















Add:  Depreciation of fixed assets


1,281

119

1,400


1,293

122

1,415


1,289

121

1,410


183

17

200

Adjusted EBITDA


4,766

(1,407)

3,355


4,641

(1,746)

2,852


7,771

(716)

7,015


1,100

(101)

993


















Net income (loss) attributable to Baidu


3,731

(2,327)

2,412


1,698

(2,875)

41


4,424

(1,442)

3,579


626

(203)

507

Add: Share-based compensation expenses


1,337

280

1,495


1,177

306

1,348


1,473

364

1,676


208

51

237

Add: Amortization and impairment of intangible assets(1)(3)


8

52

37


143

54

173


19

65

55


4

9

8

Add: Disposal loss (gain)(3)(4)


(181)

-

(181)


(252)

-

(252)


453

-

453


64

-

64

Add: Impairment of long-term investments(3)


162

23

185


1,528

24

1,542


752

48

779


107

7

110

Add: Fair value loss (gain) of long-term investments(3)


(285)

(1)

(286)


(176)

-

(176)


(2,535)

-

(2,535)


(359)

-

(359)

Add: Reconciling items on equity method investments(2)


(32)

11

(27)


401

9

406


1,070

9

1,075


151

1

152

Net income (loss) attributable to Baidu (non-GAAP)


4,740

(1,962)

3,635


4,519

(2,482)

3,082


5,656

(956)

5,082


801

(135)

719


















Diluted earnings per ADS




6.57




0.02




10.31




1.46

Add:  Accretion of the redeemable noncontrolling interests




0.05




0.07




0.07




0.01

Add:  Non-GAAP adjustments to earnings per ADS




3.49




8.75




4.35




0.61

Diluted earnings per ADS (non-GAAP)




10.11




8.84




14.73




2.08





































































(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

(4) Includes re-measurement gain or loss of previous held equity interest in the acquisition


















 

 

Cision View original content:http://www.prnewswire.com/news-releases/baidu-announces-second-quarter-2020-results-301112078.html

SOURCE Baidu, Inc.

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