In March, Baidu’s mobile reach expanded to 1.1 billion monthly active devices while DuerOS voice assistant installed base reached 275 million devices and generated 2.37 billion monthly voice queries.
We are leveraging Baidu AI to provide enterprise solutions to businesses and local governments, which significantly expands our total addressable market,
said Robin Li, Chairman and CEO of Baidu.
Looking ahead, we are quite excited about the opportunities to significantly improve content and service discovery through in-app search and increase customer ROI with our entrance into CRM, to deepen our offering to our marketing customers.
Hailong Xiang, senior vice president of the search business, has tendered his resignation. Baidu promoted Dou Shen to senior vice president, overseeing Baidu’s mobile business, previously known as the search business.
About Dou Shen
Previously, Dou served as vice president of Baidu’s mobile products, overseeing the development of Baidu App, Haokan short video app and Baidu smart mini program. Dou has served in various other roles at Baidu since joining in 2012, including web search, display advertising and the financial services group.
Prior to Baidu, Dou worked in the adCenter group at Microsoft and sold Buzzlabs, a social media monitoring and analysis platform company that he co-founded, to IAC-owned CityGrid Media.
Dou received a bachelor’s degree in engineering from North China Electric Power University, a master’s degree in engineering from Tsinghua University, and a Ph.D. in computer science from the Hong Kong University of Science and Technology.
Baidu’s board of directors has authorized a new share repurchase program, under which Baidu may repurchase up to US$1 billion of its shares, effective until July 1, 2020.
Baidu ranked 8th place on BrandZ’s 2019 Top 100 Most Valuable Chinese Brands Chart and has been ranked in the Top 10 Most Valuable Chinese Brands for nine consecutive years.
Baidu App daily active users (“DAUs”) in March 2019 reached 174 million, growing 28% year over year.
Haokan, Baidu’s short video app based on user rewards, saw 768% YoY growth in DAUs in March 2019 and reached 22 million.
Baidu continues to expand its content ecosystem to provide users with native-app like experience for search and feed:
- Baijiahao (“BJH accounts”), Baidu feed’s content network, grew to 2.1 million publisher accounts in March 2019
- Baidu Smart Mini Program, launched in July 2018, saw its monthly active users (“MAUs”) in reach 181 million in March 2019 , growing 23%
- Baidu connected 1.5 million out-of-home digital screens in 362 cities across 31 provinces to its ad partner network in March 2019
DuerOS voice assistant installed base reached 275 million, increasing 279% year over year, and monthly voice queries on DuerOS reached 2.37 billion, increasing 817% year over year in March 2019.
DuerOS skills store continues to push the boundary on improving user experience with over 1,100 skills in wide-ranging genres, including iQIYI, (long-form video), Huya (live video), Haokan (short video), Digital Pets (gaming), 51Talk (online education) and Tencent News Audio Edition (news).
Recently released first-party DuerOS smart devices include:
- Xiaodu Smart Display 1S (MSRP US$49)
- Xiaodu TV Sound Bar (MSRP US$119), which doubles as a home theater system and high definition OTT TV box
- Xiaodu Smart Speaker 1S (MSRP US$22), which comes equipped with DuerOS-powered universal remote control, capable of connecting to household appliances, including air conditioners, televisions and OTT TV boxes from Samsung, Panasonic and Haier.
Chery Automobile EXEED sedans were released in April 2019, equipped with DuerOS for Apollo in-vehicle infotainment system. DuerOS for Apollo has received very positive initial user feedback.
Over 190 Baidu Smart Mini Programs and DuerOS skills are now available in the skills store of DuerOS for Apollo, including iQIYI (online video), E Designated Driving (driving services) and GeekPark (technology news).
In March 2019, Baidu began testing China’s first robotaxi fleet powered by Apollo in Changsha, the capital of Hunan province, to help improve traffic congestion, air pollution and road safety.
Apollo Open Platform, embraced by a developer community of 15,000, has been adopted for many innovative auto pilot scenarios, including street cleaning, goods delivery and shuttle services.
According to the inaugural Beijing Autonomous Vehicles Road Test Report for 2018 issued by the Beijing Municipal Commission of Transport, Apollo amassed over 10 times the test miles of the next industry player in China.
Baidu Cloud held its ABC Internet Summit in April 2019, introducing a library of AI toolkits for Baidu Cloud to empower content producers to better create, edit and analyze video content.
According to the 2H18 IDC China Public Cloud Report, Baidu Cloud, for the first time, entered the top 5 rankings for public cloud service providers in IaaS (Infrastructure as a Service) and PaaS (Platform as a Service) in China.
According to the WIPO Artificial Intelligence Report for 2019 issued by the World Intellectual Property Organization, Baidu leads among companies globally in patent applications for deep learning sub-category of machine learning and is the only Chinese Internet company listed among the top 30 AI patent applicants worldwide.
Baidu IME (mobile keyboard) released an AI version in January 2019, which allows for mixed voice input in Mandarin with English and other Chinese dialects, real-time translation and augmented reality emoticons, demonstrating Baidu AI capabilities in voice, image, and facial recognition.
Over 60% of Baidu IME AI version users have opted for voice input. The number of users (devices) that have used the voice assistant feature in Baidu Maps has surpassed 200 million in March 2019, over tripling over the prior year.
iQIYI subscribers reached 96.8 million in March 2019, adding 9.4 million members during the quarter, further strengthening its foundation to offer blockbuster original entertainment content. iQiyi is among the top 5 mobile apps in China in March 2019 according to data from iResearch.
In March 2019, iQIYI completed the offering of US$1.2 billion of 2.00% convertible senior notes due 2025, the proceeds from which, net of capped call fees, will be used to expand and enhance iQIYI’s content offerings and strengthen its technologies, as well as for working capital and other general corporate purposes.
Baidu Finance Results in Q1 2019
Total revenues reached RMB 24.1 billion ($3.59 billion), increasing 15% year over year, or 21% year over year excluding the impact of announced divestitures.
Online marketing revenues, 73.44% of total revenues, were RMB17.7 billion ($2.63 billion), increasing 3% year over year, which was mainly due to strength in education, retail, and business services, while healthcare, online games services, and financial services sectors were less vibrant.
Other revenues were RMB 6.5 billion ($963 million), increasing 73% year over year, which was mainly due to the robust growth in iQiyi membership services, cloud, and other businesses.
Content costs were RMB 6.2 billion ($917 million), increasing 47% year over year, mainly due to increased investments in iQiyi content and, to a lesser extent, in content for BJH accounts, Baidu feeds’ content network.
Traffic acquisition cost was RMB 3.2 billion ($474 million), increasing 41% year over year, as a result of higher TAC costs and revenues derived from online TV and offline digitalized screens.
Bandwidth costs were RMB 2.0 billion ($304 million), increasing 39% year over year, mainly due to increasing demand from feed, video and cloud.
Other costs of revenues, which includes depreciation, operational costs, and share-based compensation, was RMB 3.5 billion ($515 million), increasing 75% year over year, mainly due to higher depreciation expense and the growth in sales of first-party smart devices.
Selling, general and administrative expenses were RMB 6.1 billion ($902 million), increasing 93% year over year, primarily due to increased investment in the channel and promotional marketing, including the marketing campaign around the Chinese New Year, as well as an increase in personnel-related expenses.
Research and development expenses were RMB 4.2 billion ($621 million), increasing 26% year over year, primarily due to an increase in personnel related expenses.
Operating loss was RMB 936 million ($139 million), compared to operating income of RMB 4.6 billion in Q1 2018. Operating income of Baidu Core was RMB 1.1 billion ($163 million), decreasing 81% year over year. Non-GAAP operating income was RMB 401 million ($60 million), decreasing 93% year over year. Non-GAAP operating income of Baidu Core was RMB 2.1 billion ($314 million), decreasing 67% year over year.
Total other income was RMB 900 million ($134 million), decreasing 57% year over year, mainly due to increased loss from equity method investments.
Income tax expense was RMB 294 million ($44 million), compared to RMB 1.1 billion in Q1 2018. Low income tax expense in the quarter was mainly due to lower pre-tax income generated by Baidu Core.
Net loss attributable to Baidu was RMB 327 million ($49 million), compared to net income attributable to Baidu of RMB 6.7 billion in Q1 2018. Diluted loss per ADS amounted to RMB 1 ($0.15). Net income attributable to Baidu Core was RMB 703 million ($105 million), decreasing 90% year over year.
Non-GAAP net income attributable to Baidu was RMB 967 million ($144 million), decreasing 80% year over year. Non-GAAP diluted earnings per ADS amounted to RMB 3 ($0.41). Non-GAAP net income attributable to Baidu Core was RMB 1.8 billion ($272 million), decreasing 66% year over year.
Adjusted EBITDA was RMB 1.8 billion ($263 million) and adjusted EBITDA margin was 7%. Adjusted EBITDA to Baidu Core was RMB 3.4 billion ($502 million) and adjusted EBITDA margin to Baidu Core was 19%.
As of March 31, 2019, cash, cash equivalents, restricted cash and short-term investments were RMB 143.6 billion ($21.40 billion). Excluding iQiyi, cash, cash equivalents, restricted cash and short-term investments were RMB 125.7 billion ($18.73 billion), as of March 31, 2019.
Free cash flow was negative RMB 1.3 billion ($195 million). Excluding iQIYI, free cash flow was negative RMB 1.5 billion ($226 million).