Le Lézard
Classified in: Science and technology, Business
Subjects: ERN, CCA

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,
2018


March 31,
2019


June 30,
2019


YOY


YOY[2]


QOQ


June 30,
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,
2018


March 31,
2019


June 30,
2019


YOY


 YOY[2]


QOQ


June 30,
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

Mobile Ecosystem

DuerOS

Apollo

Cloud & AI Platform

iQIYI

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."


[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
June 30, 2018 (RMB)


Three months ended
March 31, 2019 (RMB)


Three months ended
June 30, 2019 (RMB)


Three months ended
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

 

 

 

SOURCE Baidu, Inc.


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