The number of Baidu Mini Programs grew by 17% YoY in October 2020; the average number of active mini-programs per user reached 9.6, according to data from QuestMobile.
Baidu in Q3
Baidu App MAU reached 544 million in Q3 2020 with 355 million MAU on its own mini program platform. Baidu’s focus on differentiating itself with open-platform, in-app search and new AI businesses has enabled Baidu Core’s adjusted EBITDA margin to reach 46% in the third quarter.
Baidu’s Mobile Ecosystem
Baidu App’s daily active users (“DAUs”) reached 206 million and its monthly active users (“MAUs”) reached 544 million in September 2020.
The massive reach of Baidu App, along with other products in Baidu’s product portfolio, is attracting a wide range of knowledge and information-centric videos, including live and short videos.
Publishers are sharing more originals on Baidu content network – Baijiahao (“BJH”) accounts, to take advantage of Baidu’s large scale and easy sharing of content across the Baidu family of apps. BJH accounts reached 3.6 million, up 52% year over year, in September 2020.
App developers are adopting Baidu Smart Mini Programs (“SMPs”) to provide users with native-app like experience on Baidu, without having to download the host apps. The number of SMPs grew three folds, and SMP monthly active users on Baidu App reached 355 million, up 22% year over year, in September 2020.
Advertisers are switching to Managed Page as the landing page for their search results to improve marketing effectiveness, resulting in Managed Page revenue reaching almost 1/3 of Baidu Core’s online marketing services revenue in Q3 2020.
iQIYI subscribers reached 104.8 million in September 2020, and membership revenue was up 7% year over year. iQIYI’s large subscriber base further strengthens iQIYI’s foundation to produce entertainment blockbuster originals.
DuerOS first-party monthly voice queries reached 2.7 billion, up 65% from last year, and DuerOS total monthly voice queries reached 5.3 billion in September 2020.
Xiaodu Smart Display ranked #1 in smart display shipments globally, and Xiaodu smart speakers ranked first in smart speaker shipments in China for the second quarter of 2020, according to market research firms IDC, Strategy Analytics, and Canalys.
The DuerOS skills store, offering 4,300 skills in wide-ranging genres, including education, video, online game, and live streaming, is supported by a developer community of 45,000.
Xiaodu Smart Earphones was introduced in September 2020, allowing users to navigate DuerOS skills using its voice assistant and hear instant language translation. Xiaodu Smart Earphones broaden the use case of the Xiaodu voice assistant from home, auto and hotel to anywhere with mobile.
Baidu Cloud, AI Services & AI Platform
Baidu partners with Postal Savings Bank of China (“PSBC”), a top consumer bank in China with 40,000 branches nationwide, to provide Baidu AI PaaS, which can be trained to provide better credit risk management by leveraging Baidu’s advanced AI capabilities, such as big data and natural language processing.
Baidu partners with the Economic and Technological Development Zone in Guiyang, a major national data center hub in China, to provide its AI PaaS platform that will be made available to the 400+ enterprises across 10 industries located in the economic development zone.
Baidu’s AI PaaS can help businesses improve their operations and do more through advanced AI, including deep learning, blockchain, and computer vision, Baidu’s AI open platform built on Baidu Cloud offers over 270 AI capabilities, attracting a developer community of over 2 million.
Baidu Translate, an AI cloud service leveraging Baidu’s advanced natural language processing, speech, and vision processing technologies, supports over 200 languages and processes over 100 billion bites a day, attracting a developer community of 400,000.
Autonomous Driving – Apollo
Baidu partners with the city of Guangzhou, Guangdong to provide smart transportation solutions to improve traffic efficiency, air pollution and road safety.
Apollo Go Robotaxi is now opened to the public in Beijing, becoming the third city following Changsha, Hunan and Cangzhou, Hebei. Apollo Go rides may be ordered from Baidu Maps or Apollo Go app. Baidu was granted China’s first driverless test permit in Changsha.
Baidu to Acquire Live Streaming Platform
Baidu today announced that the Company had entered into definitive agreements with JOYY Inc. (“JOYY”).
Pursuant to the agreements, Baidu will acquire JOYY’s domestic video-based entertainment live streaming business in China (“YY Live”), which includes YY mobile app, YY.com website and PC YY, among others, for an aggregate purchase price of approximately US$3.6 billion in cash, subject to certain adjustments.
The closing of the transaction is subject to certain conditions and is currently expected to occur in the first half of 2021.
Baidu Corporate Highlights
Baidu received an ESG rating of BB from MSCI and an ESG risk score of 21.5 from Sustainalytics, reflecting the progress the Baidu has made through ESG policy changes and improved disclosure on corporate governance.
Baidu entered into definitive agreements to raise financing for its Smart Living Group (“SLG”) at a post-money valuation of approximately RMB 20 billion, or US$2.9 billion, in September 2020.
The transaction is expected to be completed in the fourth quarter of 2020, and Baidu is expected to be a majority shareholder.
Baidu completed a bond offering of US$950 million in October 2020, consisting of US$650 million of 1.720% notes due 2026 and US$300 million of 2.375% notes due 2030, the proceeds from which are expected to be used to repay certain existing indebtedness.
Baidu returned US$596 million to shareholders in Q3 2020, bringing the cumulative share repurchase over the last two years to approximately US$2.0 billion.
Total revenues reached RMB 28.2 billion ($4.16 billion), increasing 1% year over year.
Revenue from Baidu Core reached RMB 21.4 billion ($3.15 billion), increasing 2% year over year. Online marketing revenue from Baidu Core was RMB 18.4 billion ($2.72 billion), which was basically flat from last year. Non-online marketing revenue from Baidu Core reached 2.9 billion ($434 million), increasing 14% year over year, primarily driven by the growth of cloud services.
The cost of revenues was RMB 12.8 billion ($1.89 billion), decreasing 22% year over year, primarily due to a decrease in content costs, traffic acquisition costs and costs of goods sold.
Selling, general and administrative expenses were RMB 4.7 billion ($692 million), increasing 1% year over year.
Research and development expenses were RMB 4.6 billion ($673 million), decreasing 3% year over year.
Operating income was RMB 6.2 billion ($907 million) and the operating margin was 22%. Baidu Core operating income was RMB 7.4 billion ($1.09 billion) and Baidu Core operating margin was 35%.
Non-GAAP operating income was RMB 7.6 billion ($1.13 billion), and non-GAAP operating margin was 27%. Non-GAAP Baidu Core operating income was RMB 8.5 billion ($1.25 billion), and non-GAAP Baidu Core operating margin was 40%.
Total other income was RMB 8.9 billion ($1.31 billion), compared to a total other loss of RMB 9.5 billion in Q3 2019. Total other income in Q3 2020 included a fair value gain of RMB 9.0 billion from long-term investments.
Income tax expense was RMB 1.6 billion ($239 million), compared to RMB 934 million in Q3 2019.
Net income attributable to Baidu was RMB 13.7 billion ($2.02 billion), and diluted earnings per ADS was RMB 39.79 ($5.86). Net income attributable to Baidu Core was RMB 14.4 billion ($2.12 billion).
Non-GAAP net income attributable to Baidu was RMB 7.0 billion ($1.03 billion), and non-GAAP net margin was 25%. Non-GAAP diluted earnings per ADS amounted to RMB 20.35 ($3.00). Non-GAAP net income attributable to Baidu Core was RMB 7.5 billion ($1.10 billion), and the non-GAAP net margin for Baidu Core was 35%.
Adjusted EBITDA was RMB 9.1 billion ($1.34 billion) and the adjusted EBITDA margin was 32%. Adjusted EBITDA for Baidu Core was RMB 9.8 billion ($1.45 billion) and the adjusted EBITDA margin for Baidu Core was 46%.
As of September 30, 2020, cash, cash equivalents, restricted cash, and short-term investments were RMB 146.0 billion ($21.50 billion), and cash, cash equivalents, restricted cash, and short-term investments excluding iQIYI were RMB 138.5 billion ($20.41 billion).
Free cash flow was RMB 6.3 billion ($925 million), and free cash flow excluding iQIYI was RMB 8.3 billion ($1.22 billion).