• Total Revenue (Q4 2024): RMB34.1 billion, a decrease of 2% year over year.
• Total Revenue (Full Year 2024): RMB133.1 billion, a decrease of 1% year over year.
• Baidu Core Revenue (Q4 2024): RMB27.7 billion, an increase of 1% year over year.
• Baidu Core Revenue (Full Year 2024): RMB104.7 billion, an increase of 1% year over year.
• AI Cloud Revenue (Q4 2024): RMB7.1 billion, a year-over-year increase of 26%.
• iQIYI Revenue (Q4 2024): RMB6.6 billion, a decrease of 14% year over year.
• Operating Income (Q4 2024): RMB3.9 billion, compared to RMB5.4 billion in the same period last year.
• Net Income Attributable to Baidu (Q4 2024): RMB5.2 billion.
• Non-GAAP Net Income Attributable to Baidu (Q4 2024): RMB6.7 billion.
• Cash, Cash Equivalents, and Short-term Investments (Dec 31, 2024): RMB139.1 billion.
• Free Cash Flow (2024): RMB13.1 billion.
• Employee Count (Dec 31, 2024): Approximately 31,000 employees.

• Warning! GuruFocus has detected 3 Warning Sign with BIDU.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Baidu Inc (NASDAQ:BIDU) reported a slight year-over-year increase in core total revenue for Q4, reaching RMB27.7 billion.
• AI Cloud revenue grew by 26% year over year, demonstrating robust momentum and contributing significantly to the company's growth.
• The company has made strategic investments in AI, with ERNIE showing industry-leading capabilities and driving widespread adoption across various sectors.
• Baidu's autonomous ride-hailing service, Apollo Go, has proven its business model's viability, with a 36% year-over-year growth in rides and successful expansion into new markets like Hong Kong.
• Baidu Wenku's subscription revenue grew by 21% year over year, with AI-enabled features significantly increasing user engagement.

Negative Points

• Total revenues for Q4 decreased by 2% year over year, and full-year 2024 revenues decreased by 1% year over year.
• Baidu Core's online marketing revenue decreased by 7% year over year in Q4, reflecting challenges in the advertising sector.
• Revenue from iQIYI decreased by 14% year over year in Q4, indicating struggles in the entertainment segment.
• Operating income for Q4 decreased compared to the same period last year, impacted by one-time losses including credit losses and inventory write-downs.
• The company faces a challenging competitive landscape in the advertising business, with no significant improvements seen in Q4 despite macroeconomic easing measures.

Q & A Highlights

Q: Could management share the strategic thinking behind open sourcing the upcoming ERNIE 4.5 series and making ERNIE Bot free? How does Baidu plan to stay ahead in the competitive landscape of foundation models? A: Robin Yanhong Li, CEO, explained that open sourcing ERNIE 4.5 is intended to drive broader adoption by allowing users to try the model easily. Baidu's confidence in its technology leadership, backed by extensive R&D investment and AI capabilities, supports this decision. The move aims to showcase ERNIE's value and expand its impact across various scenarios. Baidu plans to continue evolving ERNIE to address real-world problems effectively.

Q: How should we think about the future adjustments or changes in Baidu's search business following recent quarters of revamp? A: Julius Rong Luo, EVP of MEG, stated that currently, 22% of search result pages contain AI-generated content. Baidu is transforming search by expanding beyond text to include diverse content formats like short videos and live streaming. The focus is on deep personalization and improving user engagement. Baidu aims to maintain its leadership in AI-powered search transformation, offering integrated platforms that go beyond AI chatbots.

Q: What is the outlook for Baidu's core ad growth in Q1 2025 and the full year? Has the advertising business started to recover? A: Julius Rong Luo, EVP of MEG, noted that while macroeconomic conditions remain challenging, Baidu is optimistic about gradual improvement in advertising revenue. The AI transformation of search is expected to enhance user experiences and create new monetization opportunities. Baidu anticipates better performance in the first half of 2025 compared to Q4 2024, with further improvement in the second half.

Q: Can we expect continued positive growth in Baidu's AI Cloud business in 2025? What are the main drivers behind this momentum? A: Dou Shen, EVP of Baidu AI Cloud Group, highlighted that AI Cloud revenue growth accelerated to 26% year over year in Q4 2024. The growth is driven by rising demand for ERNIE and AI infrastructure, with strong customer base expansion across various sectors. Baidu expects the AI Cloud market to grow rapidly in 2025, with increased enterprise integration of foundation models driving API cost growth and spending on AI Cloud services.

Q: What are Baidu's strategic focuses for business investments in 2025, and what is the outlook on capital expenditures and shareholder returns? A: Jackson Junjie He, Interim CFO, stated that Baidu will continue investing in AI capabilities, focusing on AI transformation across its product portfolio, AI Cloud adoption, and autonomous driving expansion. Capital expenditures will prioritize strengthening technology leadership and AI service adoption. Baidu plans to accelerate its buyback program, having repurchased over USD 1 billion in 2024, as part of efforts to return value to shareholders.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.