Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2024

Commission File Number: 000-51469

 

 

BAIDU, INC.

 

 

Baidu Campus

No. 10 Shangdi 10th Street

Haidian District, Beijing 100085

The People’s Republic of China

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒   Form 40-F ☐

 

 

 

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EXPLANATORY NOTE

Baidu, Inc. (the “Company”) hereby furnishes the press release announcing its unaudited financial results for the quarter ended June 30, 2024, which is attached hereto as exhibit 99.1. Pursuant to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange, the Company hereby also furnishes the reconciliation of the material differences between its unaudited financial results for the quarter ended June 30, 2024 prepared under the U.S. Generally Accepted Accounting Principles and the International Financial Reporting Standards, which is attached hereto as exhibit 99.2.

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press Release — Baidu Announces Second Quarter 2024 Results
99.2		Reconciliation Between the U.S. Generally Accepted Accounting Principles and the International Financial Reporting Standards

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

BAIDU, INC.
By		:		/s/ Rong Luo
Name		:		Rong Luo
Title		:		Chief Financial Officer

Date: August 22, 2024

Exhibit 99.1

Baidu Announces Second Quarter 2024 Results

BEIJING, China, Aug 22, 2024 — Baidu, Inc. (NASDAQ: BIDU and HKEX: 9888 (HKD Counter) and 89888 (RMB Counter)), (“Baidu” or the “Company”), a leading AI company with strong Internet foundation, today announced its unaudited financial results for the second quarter ended June 30, 2024.

“AI Cloud continued to accelerate in the second quarter, offsetting the ongoing macro headwinds for online marketing revenue and resulting in modestly positive topline growth for Baidu Core. Operationally, we fast-tracked the renovation of Baidu search, which we believe will drive long-term success despite the short-term impact on monetization. We also achieved new breakthroughs with Apollo Go, which now offers 100% fully driverless ride-hailing services in practically the entire Wuhan municipality, and has started scalable testing of the latest RT6 vehicles,” said Robin Li, Co-founder and CEO of Baidu. “Gradually, the transformative impact of Gen-AI and foundation models is becoming more tangible in business and everyday life. Throughout all layers of our AI technology stack and with the rapid adoption of applications built on top of ERNIE, we are scaling AI to address real-world problems and generate substantial value both for external customers and our own product portfolio.”

“As we speeded up the AI-native transformation of our products in the second quarter, we continued to optimize our operations and maintained a healthy margin,” said Rong Luo, CFO of Baidu. “For AI Cloud in particular, we expect growth to maintain a strong momentum.”

Second Quarter 2024 Financial Highlights¹

 

		Baidu, Inc.
(In millions except per ADS, unaudited)		Q2				Q1
		2023				2024				Q2 2024								YOY				QOQ
		RMB				RMB				RMB				US$
Total revenues			34,056				31,513				33,931				4,669				(0	%)			8	%
Operating income			5,210				5,484				5,944				818				14	%			8	%
Operating income (non-GAAP)2			7,334				6,673				7,500				1,032				2	%			12	%
Net income to Baidu			5,210				5,448				5,488				755				5	%			1	%
Net income to Baidu (non-GAAP)2			7,998				7,011				7,396				1,018				(8	%)			5	%
Diluted earnings per ADS			14.17				14.91				15.01				2.07				6	%			1	%
Diluted earnings per ADS (non-GAAP)2			22.55				19.91				21.02				2.89				(7	%)			6	%
Adjusted EBITDA2			9,116				8,244				9,147				1,259				0	%			11	%
Adjusted EBITDA margin			27	%			26	%			27	%			27	%

 

1	Unless otherwise noted, RMB to USD was converted at an exchange rate of RMB7.2672 as of June 28, 2024, 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 the Non-GAAP Financial Measures section (see also “Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures” for more details).

 

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		Baidu Core
(In millions, unaudited)		Q2				Q1
		2023				2024				Q2 2024								YOY				QOQ
		RMB				RMB				RMB				US$
Total revenues			26,407				23,803				26,687				3,672				1	%			12	%
Operating income			4,568				4,538				5,608				772				23	%			24	%
Operating income (non-GAAP)2			6,516				5,586				7,005				964				8	%			25	%
Net income to Baidu Core			5,012				5,150				5,462				752				9	%			6	%
Net income to Baidu Core (non-GAAP)2			7,694				6,628				7,290				1,003				(5	%)			10	%
Adjusted EBITDA2			8,229				7,118				8,617				1,186				5	%			21	%
Adjusted EBITDA margin			31	%			30	%			32	%			32	%

Operational Highlights

Corporate

 

•	Baidu expanded the ERNIE family of models with the launch of ERNIE 4.0 Turbo in June 2024, offering superior capabilities for typical use cases, and designed to run faster and at lower cost compared to ERNIE 4.0.

 

•	Baidu returned US$301 million to shareholders since the beginning of Q2 2024, bringing the cumulative repurchase to about US$1.2 billion under the 2023 share repurchase program.

 

•

Baidu earned a position in the China edition of the S&P Global Sustainability Yearbook, in recognition of its exceptional ESG performance. The selection stems from a comprehensive evaluation of 1,700 Chinese companies as part of the S&P Global 2023 Corporate Sustainability Assessment, underscoring Baidu’s sustainability practices.

AI Cloud

 

•	PaddlePaddle and ERNIE developer community grew to 14.7 million in June 2024.

Intelligent Driving

 

•	Apollo Go, Baidu’s autonomous ride-hailing service, provided about 899K rides in the second quarter of 2024, up 26% year over year. As of July 28, 2024, the cumulative rides provided to the public by Apollo Go surpassed 7 million.

 

•	On June 19, Apollo Go started offering 100% fully driverless operations in practically the entire Wuhan municipality, its largest operational city, marking a significant milestone.

 

•	The sixth-generation of our autonomous vehicle, the RT6, is now undergoing scalable testing.

 

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Mobile Ecosystem

 

•	In June 2024, Baidu App’s MAUs reached 703 million, up 4% year over year.

 

•	Managed Page accounted for 51% of Baidu Core’s online marketing revenue in the second quarter of 2024.

Second Quarter 2024 Financial Results

Total revenues were RMB33.9 billion ($4.67 billion), which was basically flat from last year.

 

•

Revenue from Baidu Core was RMB26.7 billion ($3.67 billion), increasing 1% year over year; online marketing revenue was RMB19.2 billion ($2.64 billion), decreasing 2% year over year, and non-online marketing revenue was RMB7.5 billion ($1.03 billion), up 10% year over year, mainly driven by AI Cloud business.

 

•	Revenue from iQIYI was RMB7.4 billion ($1.02 billion), decreasing 5% year over year.

Cost of revenues was RMB16.4 billion ($2.26 billion), increasing 1% year over year, primarily due to an increase in traffic acquisition costs and costs related to AI Cloud business.

Selling, general and administrative expenses were RMB5.7 billion ($784 million), decreasing 9% year over year, primarily due to a decrease in expected credit losses, channel spending and promotional marketing expenses and personnel related expenses.

Research and development expenses were RMB5.9 billion ($810 million), decreasing 8% year over year, primarily due to a decrease in personnel related expenses.

Operating income was RMB5.9 billion ($818 million). Baidu Core operating income was

RMB5.6 billion ($772 million), and Baidu Core operating margin was 21%. Non-GAAP operating income was RMB7.5 billion ($1.03 billion). Non-GAAP Baidu Core operating income was RMB7.0 billion ($964 million), and non-GAAP Baidu Core operating margin was 26%.

Total other income, net was RMB771 million ($106 million), decreasing 44% year over year, primarily due to a decrease in net foreign exchange gain and disposal gain, partially offset by the decrease in fair value loss and impairment loss from long-term investments.

Income tax expense was RMB1.1 billion ($156 million), compared to RMB1.3 billion in the same period last year.

Net income attributable to Baidu was RMB5.5 billion ($755 million), and diluted earnings per ADS was RMB15.01 ($2.07). Net income attributable to Baidu Core was RMB5.5 billion ($752 million), and net margin for Baidu Core was 20%. Non-GAAP net income attributable to Baidu was RMB7.4 billion ($1.02 billion). Non-GAAP diluted earnings per ADS was RMB21.02 ($2.89). Non-GAAP net income attributable to Baidu Core was RMB7.3 billion ($1.00 billion), and non-GAAP net margin for Baidu Core was 27%.

 

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Adjusted EBITDA was RMB9.1 billion ($1.26 billion) and adjusted EBITDA margin was 27%. Adjusted EBITDA for Baidu Core was RMB8.6 billion ($1.19 billion) and adjusted EBITDA margin for Baidu Core was 32%.

As of June 30, 2024, cash, cash equivalents, restricted cash and short-term investments were RMB162.0 billion ($22.29 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB155.0 billion ($21.32 billion). Free cash flow was

RMB6.3 billion ($862 million), and free cash flow excluding iQIYI was RMB5.9 billion ($810 million).

Conference Call Information

Baidu’s management will hold an earnings conference call at 8.00 AM on Aug 22, 2024, U.S. Eastern Time (8.00 PM on Aug 22, 2024, Beijing Time).

Please register in advance of the conference call using the link provided below. It will automatically direct you to the registration page of “Baidu Inc. Q2 2024 Earnings Conference Call”. Please follow the steps to enter your registration details, then click “Register”. Upon registering, you will then be provided with the dial-in number, the passcode, and your unique access PIN. This information will also be emailed to you as a calendar invite.

For pre-registration, please click:

https://s1.c-conf.com/diamondpass/10040402-jgu7y6.html

In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), the passcode and unique access PIN) provided in the calendar invite that you have received following your pre-registration.

Additionally, a live and archived webcast of this conference call will be available at https://ir.baidu.com.

About Baidu

Founded in 2000, Baidu’s mission is to make the complicated world simpler through technology. Baidu is a leading AI company with strong Internet foundation, trading on NASDAQ under “BIDU” and HKEX under “9888”. One Baidu ADS represents eight Class A ordinary shares.

Contacts

Investors Relations, Baidu, Inc.

Tel: [phone]

Email: [e-mail]

 

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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, 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 announcements made on the website of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), 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, and announcements on the website of the Hong Kong Stock Exchange. 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.

 

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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, non-GAAP operating margin, non-GAAP net income 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 non-cash charges or non-operating 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, impairment of long-term investments, and fair value gain (loss) 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 share, adjusted for related income tax effects, are also excluded.

 

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Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated by dividing non-GAAP net income attributable to Baidu, 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.

For more information on non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measure.”

 

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Baidu, Inc.

Condensed Consolidated Statements of Income

(In millions except for 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,
		2023				2024				2024				2024				2023				2024				2024
		RMB				RMB				RMB				US$(2)				RMB				RMB				US$(2)
Revenues:
Online marketing services			21,081				18,490				20,625				2,838				39,053				39,115				5,382
Others			12,975				13,023				13,306				1,831				26,147				26,329				3,623
Total revenues			34,056				31,513				33,931				4,669				65,200				65,444				9,005
Costs and expenses:
Cost of revenues(1)			16,167				15,291				16,398				2,257				31,319				31,689				4,361
Selling, general and administrative(1)			6,298				5,375				5,700				784				11,887				11,075				1,524
Research and development(1)			6,381				5,363				5,889				810				11,804				11,252				1,548
Total costs and expenses			28,846				26,029				27,987				3,851				55,010				54,016				7,433
Operating income			5,210				5,484				5,944				818				10,190				11,428				1,572
Other income:
Interest income			1,948				2,091				1,993				274				3,863				4,084				562
Interest expense			(817	)			(766	)			(742	)			(102	)			(1,621	)			(1,508	)			(208	)
Foreign exchange gain, net			1,176				401				93				13				1,070				494				68
Share of losses from equity method investments			(383	)			(205	)			(119	)			(16	)			(431	)			(324	)			(45	)
Others, net			(555	)			(275	)			(454	)			(63	)			1,083				(729	)			(100	)
Total other income, net			1,369				1,246				771				106				3,964				2,017				277
Income before income taxes			6,579				6,730				6,715				924				14,154				13,445				1,849
Income tax expense			1,270				883				1,131				156				2,463				2,014				277
Net income			5,309				5,847				5,584				768				11,691				11,431				1,572
Net income attributable to noncontrolling interests			99				399				96				13				656				495				68
Net income attributable to Baidu			5,210				5,448				5,488				755				11,035				10,936				1,504

 

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		Three Months Ended																Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,				June 30,				June 30,
		2023				2024				2024				2024				2023				2024				2024
		RMB				RMB				RMB				US$(2)				RMB				RMB				US$(2)
Earnings per ADS
(1 ADS representing 8
Class A ordinary shares):
— Basic			14.34				14.97				15.11				2.08				30.55				30.12				4.14
— Diluted			14.17				14.91				15.01				2.07				30.05				29.98				4.13
Earnings per share for Class A and Class B ordinary shares:
— Basic			1.79				1.87				1.89				0.26				3.82				3.77				0.52
— Diluted			1.77				1.86				1.88				0.26				3.76				3.74				0.51
Weighted average number of Class A and Class B ordinary shares outstanding (in millions):
— Basic			2,804				2,804				2,796				2,796				2,801				2,800				2,800
— Diluted			2,834				2,816				2,804				2,804				2,836				2,810				2,810
(1)   Includes share-based compensation expenses as follows:
Cost of revenues			194				108				146				20				292				254				35
Selling, general and administrative			446				417				385				53				909				802				110
Research and development			1,403				618				981				135				2,231				1,599				220
Total share-based compensation expenses			2,043				1,143				1,512				208				3,432				2,655				365

 

(2)	All translations from RMB to U.S. dollars are made at a rate of RMB7.2672 to US$1.00, the exchange rate in effect as of June 28, 2024 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System.

 

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Baidu, Inc.

Condensed Consolidated Balance Sheets

(In millions, unaudited)

 

		December 31,				June 30,				June 30,
		2023				2024				2024
		RMB				RMB				US$
ASSETS
Current assets:
Cash and cash equivalents			25,231				43,534				5,990
Restricted cash			11,503				11,646				1,603
Short-term investments, net			168,670				106,821				14,699
Accounts receivable, net			10,848				11,112				1,529
Amounts due from related parties			1,424				1,396				192
Other current assets, net			12,579				12,757				1,756
Total current assets			230,255				187,266				25,769
Non-current assets:
Fixed assets, net			27,960				29,154				4,012
Licensed copyrights, net			6,967				6,914				951
Produced content, net			13,377				14,320				1,970
Intangible assets, net			881				812				112
Goodwill			22,586				22,586				3,108
Long-term investments, net			47,957				46,193				6,356
Long-term time deposits and held-to-maturity investments			24,666				72,497				9,976
Amounts due from related parties			195				212				29
Deferred tax assets, net			2,100				2,342				322
Operating lease right-of-use assets			10,851				10,919				1,503
Other non-current assets			18,964				22,312				3,071
Total non-current assets			176,504				228,261				31,410
Total assets			406,759				415,527				57,179

 

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		December 31,				June 30,				June 30,
		2023				2024				2024
		RMB				RMB				US$
LIABILITIES, REDEEMABLE
NONCONTROLLING INTERESTS AND EQUITY
Current liabilities:
Short-term loans			10,257				12,514				1,722
Accounts payable and accrued liabilities			37,717				37,988				5,227
Customer deposits and deferred revenue			14,627				14,038				1,932
Deferred income			306				291				40
Long-term loans, current portion			2				29				4
Convertible senior notes, current portion			2,802				2,892				398
Notes payable, current portion			6,029				7,986				1,099
Amounts due to related parties			1,603				1,831				252
Operating lease liabilities			3,108				3,196				440
Total current liabilities			76,451				80,765				11,114
Non-current liabilities:
Deferred income			200				287				39
Deferred revenue			481				520				72
Amounts due to related parties			77				67				9
Long-term loans			14,223				14,859				2,045
Notes payable			34,990				27,860				3,834
Convertible senior notes			8,144				8,408				1,157
Deferred tax liabilities			2,725				2,940				405
Operating lease liabilities			5,040				5,056				696
Other non-current liabilities			1,820				1,827				250
Total non-current liabilities			67,700				61,824				8,507
Total liabilities			144,151				142,589				19,621
Redeemable noncontrolling interests			9,465				10,107				1,391
Equity
Total Baidu shareholders’ equity			243,626				252,769				34,782
Noncontrolling interests			9,517				10,062				1,385
Total equity			253,143				262,831				36,167
Total liabilities, redeemable noncontrolling interests, and equity			406,759				415,527				57,179

 

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Baidu, Inc.

Selected Information

(In millions, unaudited)

 

		Three months ended																Three months ended																Three months ended																Three months ended
		June 30, 2023 (RMB)																March 31, 2024 (RMB)																June 30, 2024 (RMB)																June 30, 2024 (US$)
		Baidu								Elim &				Baidu,				Baidu								Elim &				Baidu,				Baidu								Elim &				Baidu,				Baidu								Elim &				Baidu,
		Core				iQIYI				adj(2)				Inc.				Core				iQIYI				adj(2)				Inc.				Core				iQIYI				adj(2)				Inc.				Core				iQIYI				adj(2)				Inc.
Total revenues			26,407				7,802				(153	)			34,056				23,803				7,927				(217	)			31,513				26,687				7,439				(195	)			33,931				3,672				1,024				(27	)			4,669
YOY																																			1	%			(5	%)							(0	%)
QOQ																																			12	%			(6	%)							8	%
Costs and expenses:
Cost of revenues(1)			10,553				5,774				(160	)			16,167				9,839				5,631				(179	)			15,291				10,888				5,678				(168	)			16,398				1,498				781				(22	)			2,257
Selling, general and administrative(1)			5,344				979				(25	)			6,298				4,492				922				(39	)			5,375				4,751				970				(21	)			5,700				654				133				(3	)			784
Research and development(1)			5,942				439				—				6,381				4,934				429				—				5,363				5,440				449				—				5,889				748				62				—				810
Total costs and expenses			21,839				7,192				(185	)			28,846				19,265				6,982				(218	)			26,029				21,079				7,097				(189	)			27,987				2,900				976				(25	)			3,851
YOY
Cost of revenues																																			3	%			(2	%)							1	%
Selling, general and administrative																																			(11	%)			(1	%)							(9	%)
Research and development																																			(8	%)			2	%							(8	%)
Costs and expenses																																			(3	%)			(1	%)							(3	%)
Operating income (loss)			4,568				610				32				5,210				4,538				945				1				5,484				5,608				342				(6	)			5,944				772				48				(2	)			818
YOY																																			23	%			(44	%)							14	%
QOQ																																			24	%			(64	%)							8	%
Operating margin			17	%			8	%							15	%			19	%			12	%							17	%			21	%			5	%							18	%
Add: total other income (loss), net			1,603				(234	)			—				1,369				1,508				(262	)			—				1,246				1,011				(240	)			—				771				139				(33	)			—				106
Less: income tax expense			1,262				8				—				1,270				866				17				—				883				1,105				26				—				1,131				152				4				—				156
Less: net (loss) income attributable to NCI			(103	)			3				199	(3)			99				30				11				358	(3)			399				52				7				37	(3)			96				7				1				5	(3)			13
Net income (loss) attributable to Baidu			5,012				365				(167	)			5,210				5,150				655				(357	)			5,448				5,462				69				(43	)			5,488				752				10				(7	)			755
YOY																																			9	%			(81	%)							5	%
QOQ																																			6	%			(89	%)							1	%
Net margin			19	%			5	%							15	%			22	%			8	%							17	%			20	%			1	%							16	%

 

12

---

		Three months ended																Three months ended																Three months ended																Three months ended
		June 30, 2023 (RMB)																March 31, 2024 (RMB)																June 30, 2024 (RMB)																June 30, 2024 (US$)
		Baidu								Elim &				Baidu,				Baidu								Elim &				Baidu,				Baidu								Elim &				Baidu,				Baidu								Elim &				Baidu,
		Core				iQIYI				adj(2)				Inc.				Core				iQIYI				adj(2)				Inc.				Core				iQIYI				adj(2)				Inc.				Core				iQIYI				adj(2)				Inc.
Non-GAAP financial measures:
Operating income (non-GAAP)			6,516				786								7,334				5,586				1,086								6,673				7,005				501								7,500				964				70								1,032
YOY																																			8	%			(36	%)							2	%
QOQ																																			25	%			(54	%)							12	%
Operating margin (non-GAAP)			25	%			10	%							22	%			23	%			14	%							21	%			26	%			7	%							22	%
Net income attributable to Baidu (non-GAAP)			7,694				595								7,998				6,628				844								7,011				7,290				247								7,396				1,003				34								1,018
YOY																																			(5	%)			(58	%)							(8	%)
QOQ																																			10	%			(71	%)							5	%
Net margin (non-GAAP)			29	%			8	%							23	%			28	%			11	%							22	%			27	%			3	%							22	%
Adjusted EBITDA			8,229				855								9,116				7,118				1,125								8,244				8,617				536								9,147				1,186				75								1,259
YOY																																			5	%			(37	%)							0	%
QOQ																																			21	%			(52	%)							11	%
Adjusted EBITDA margin			31	%			11	%							27	%			30	%			14	%							26	%			32	%			7	%							27	%
(1)   Includes share-based compensation as follows:
Cost of revenues			160				34								194				76				32								108				117				29								146				16				4								20
Selling, general and administrative			356				90								446				353				64								417				292				93								385				40				13								53
Research and development			1,358				45								1,403				575				43								618				945				36								981				130				5								135
Total share-based compensation			1,874				169								2,043				1,004				139								1,143				1,354				158								1,512				186				22								208

 

(2)	Relates to intersegment eliminations and adjustments

(3)	Relates to the net income attributable to iQIYI noncontrolling interests

 

13

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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, 2023 (RMB)												March 31, 2024 (RMB)												June 30, 2024 (RMB)												June 30, 2024 (US$)
		Baidu												Baidu												Baidu												Baidu
		excl.								Baidu,				excl.								Baidu,				excl.								Baidu,				excl.								Baidu,
		iQIYI				iQIYI				Inc.				iQIYI				iQIYI				Inc.				iQIYI				iQIYI				Inc.				iQIYI				iQIYI				Inc.
Net cash provided by operating activities			9,746				886				10,632				5,284				936				6,220				7,970				409				8,379				1,097				56				1,153
Net cash provided by (used in) investing activities			7,309				(421	)			6,888				(2,893	)			(223	)			(3,116	)			13,824				337				14,161				1,903				46				1,949
Net cash provided by (used in) financing activities			1,908				(1,176	)			732				2,126				261				2,387				(9,946	)			869				(9,077	)			(1,369	)			120				(1,249	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			496				128				624				154				15				169				66				22				88				9				3				12
Net increase (decrease) in cash, cash equivalents and restricted cash			19,459				(583	)			18,876				4,671				989				5,660				11,914				1,637				13,551				1,640				225				1,865
Cash, cash equivalents and restricted cash
At beginning of period			30,355				5,665				36,020				32,293				5,281				37,574				36,964				6,270				43,234				5,086				863				5,949
At end of period			49,814				5,082				54,896				36,964				6,270				43,234				48,878				7,907				56,785				6,726				1,088				7,814
Net cash provided by operating activities			9,746				886				10,632				5,284				936				6,220				7,970				409				8,379				1,097				56				1,153
Less: Capital expenditures			(2,693	)			(13	)			(2,706	)			(2,016	)			(22	)			(2,038	)			(2,090	)			(28	)			(2,118	)			(287	)			(4	)			(291	)
Free cash flow			7,053				873				7,926				3,268				914				4,182				5,880				381				6,261				810				52				862

Note: Baidu excl. iQIYI represents Baidu, Inc. minus iQIYI’s consolidated cash flows.

 

14

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Baidu, Inc.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

(In millions except for per ADS information, unaudited)

 

		Three months ended												Three months ended												Three months ended												Three months ended
		June 30, 2023 (RMB)												March 31, 2024 (RMB)												June 30, 2024 (RMB)												June 30, 2024 (US$)
		Baidu								Baidu,				Baidu								Baidu,				Baidu								Baidu,				Baidu								Baidu,
		Core				iQIYI				Inc.				Core				iQIYI				Inc.				Core				iQIYI				Inc.				Core				iQIYI				Inc.
Operating income			4,568				610				5,210				4,538				945				5,484				5,608				342				5,944				772				48				818
Add: Share-based compensation expenses			1,874				169				2,043				1,004				139				1,143				1,354				158				1,512				186				22				208
Add: Amortization and impairment of intangible assets(1)			74				7				81				44				2				46				43				1				44				6				—				6
Operating income (non-GAAP)			6,516				786				7,334				5,586				1,086				6,673				7,005				501				7,500				964				70				1,032
Add: Depreciation of fixed assets			1,713				69				1,782				1,532				39				1,571				1,612				35				1,647				222				5				227
Adjusted EBITDA			8,229				855				9,116				7,118				1,125				8,244				8,617				536				9,147				1,186				75				1,259
Net income attributable to Baidu			5,012				365				5,210				5,150				655				5,448				5,462				69				5,488				752				10				755
Add: Share-based compensation expenses			1,872				169				1,949				1,003				139				1,066				1,353				158				1,425				185				22				196
Add: Amortization and impairment of intangible assets(1)			61				7				65				42				2				43				41				1				41				6				—				6
Add: Disposal (gain)			(919	)			(89	)			(959	)			(458	)			—				(458	)			(30	)			—				(30	)			(4	)			—				(4	)
Add: Impairment of long-term investments			270				155				340				36				71				68				26				17				34				4				2				5
Add: Fair value loss (gain) of long-term investments			1,239				(4	)			1,237				725				(23	)			714				531				2				531				73				—				73
Add: Reconciling items on equity method investments(2)			296				(9	)			292				280				—				280				83				—				83				11				—				11
Add: Tax effects on non-GAAP adjustments(3)			(137	)			1				(136	)			(150	)			—				(150	)			(176	)			—				(176	)			(24	)			—				(24	)
Net income attributable to Baidu (non-GAAP)			7,694				595				7,998				6,628				844				7,011				7,290				247				7,396				1,003				34				1,018

 

15

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Three months ended

Three months ended

Three months ended

Three months ended

June 30, 2023 (RMB)

March 31, 2024 (RMB)

June 30, 2024 (RMB)

June 30, 2024 (US$)

Baidu

Baidu,

Baidu

Baidu,

Baidu

Baidu,

Baidu

Baidu,

Core

iQIYI

Inc.

Core

iQIYI

Inc.

Core

iQIYI

Inc.

Core

iQIYI

Inc.

Diluted earnings per ADS

14.17

14.91

15.01

2.07

Add: Accretion of the redeemable noncontrolling interests

0.50

0.55

0.57

0.08

Add: Non-GAAP adjustments to earnings per ADS

7.88

4.45

5.44

0.74

Diluted earnings per ADS (non-GAAP)

22.55

19.91

21.02

2.89

 

(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 share.

(3)	This represents tax impact of all non-GAAP adjustments.

 

16

Exhibit 99.2

Reconciliation between U.S. GAAP and International Financial Reporting Standards

Ernst & Young was engaged by the Company to conduct limited assurance engagement in accordance with International Standards on Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” (“ISAE 3000 (Revised)”) issued by the International Federation of Accountants (“IFAC”) on the ‘Reconciliation between U.S. GAAP and International Financial Reporting Standards’ as set out on pages 20 to 25 of the 2024 Second Quarter Results (together, the “GAAP Difference Reconciliation”).

Ernst & Young’s engagement did not involve independent examination of any of the underlying financial information. The work carried out in accordance with ISAE 3000 (Revised) is different in scope from an audit or a review conducted in accordance with International Standards on Auditing or International Standards on Review Engagements issued by the IFAC and consequently, Ernst & Young did not express an audit opinion nor a review conclusion on the GAAP Difference Reconciliation. Ernst & Young’s engagement was intended solely for the use of the Directors in connection with the above purpose for this 2024 Second Quarter Results and may not be suitable for another purpose.

The procedures performed by Ernst & Young were based on their professional judgment, having regard to their understanding of the management’s process on preparing the GAAP Difference Reconciliation, nature, business performance and financial information of the Company and its subsidiaries (“the Group”). Given the circumstances of the engagement, the procedures performed included:

 

(i)

Comparing the relevant financial information in the columns “Amounts as reported under U.S. GAAP” as disclosed in the GAAP Difference Reconciliation with the respective line items in the Group’s unaudited interim condensed consolidated statement of income for the six months ended June 30, 2024 and the unaudited condensed consolidated balance sheet as at June 30, 2024 (the “Interim Financial Statements”) prepared in accordance with the accounting principles generally accepted in the United States of America (the “U.S. GAAP”), as appropriate;

 

(ii)

Evaluating the assessment made by the board of directors in identifying the differences between the accounting policies in accordance with the U.S. GAAP and the International Financial Reporting Standards (the “IFRSs”), and the evidence supporting the adjustments made in arriving at the “Amounts under IFRSs” as disclosed in the GAAP Difference Reconciliation; and

 

(iii)

Checking the arithmetic accuracy of the computation of the Group’s financial information in the columns “Amounts under IFRSs” as disclosed in the GAAP Difference Reconciliation.

The procedures performed by Ernst & Young in this limited assurance engagement vary in nature and timing from, and are less in extent than for a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. Accordingly, Ernst & Young do not express a reasonable assurance opinion.

 

1

---

Based on the procedures performed and evidence obtained, Ernst & Young has concluded that nothing has come to their attention that causes them to believe:

 

(i)

the amounts in the columns “Amounts as reported under U.S. GAAP” as disclosed in the GAAP Difference Reconciliation for the six months ended June 30, 2024 are not, in all material respects, in agreement with the respective line items in the Interim Financial Statements prepared in accordance with the U.S. GAAP;

 

(ii)

the IFRSs adjustments as disclosed in the GAAP Difference Reconciliation, do not reflect, in all material respects, the different accounting treatments according to the Group’s accounting policies in accordance with the U.S. GAAP and the IFRSs of the relevant period; and

 

(iii)

the computation of the amounts in the columns “Amounts under IFRSs” as disclosed in the GAAP Difference Reconciliation are not arithmetically accurate.

 

2

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Reconciliation of Condensed Consolidated Statements of Income (Extract)		Amounts as reported under U.S. GAAP				For the six months ended June 30, 2023																												Amounts under IFRSs
						IFRS adjustments
						Investments in debt securities				Investments measured at fair value				Equity method investments				Operating leases				Redeemable preferred shares				Share-based compensation				Convertible senior notes
						(Note (i))				(Note (ii))				(Note (iii))				(Note (iv))				(Note (v))				(Note (vi))				(Note (vii))
		(RMB in millions)
Cost of revenues			31,319				—				—				—				(63	)			—				(87	)			—				31,169
Selling, general and administrative			11,887				—				—				—				(46	)			—				(50	)			—				11,791
Research and development			11,804				—				—				—				(25	)			—				(423	)			—				11,356
Other income (loss):
- Interest income			3,863				(950	)			—				—				—				—				—				—				2,913
- Interest expense			(1,621	)			—				—				—				(208	)			—				—				470				(1,359	)
- Others, net / Share of losses from equity method investments			652				1,185				239				(873	)							(368	)			—				(5,067	)			(4,232	)
Income before income taxes			14,154				235				239				(873	)			(74	)			(368	)			560				(4,597	)			9,276
Income taxes			2,463				40				19				—				(48	)			15				15				—				2,504
Net income			11,691				195				220				(873	)			(26	)			(383	)			545				(4,597	)			6,772
Less: net income (loss) attributable to noncontrolling interests			656				—				36				28				3				—				49				(2,509	)			(1,737	)
Net income attributable to Baidu, Inc.			11,035				195				184				(901	)			(29	)			(383	)			496				(2,088	)			8,509

 

3

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Reconciliation of Condensed Consolidated Statements of Income (Extract)		Amounts as reported under U.S. GAAP				For the six months ended June 30, 2024																												Amounts under IFRSs
						IFRS adjustments
						Investments in debt securities				Investments measured at fair value				Equity method investments				Operating leases				Redeemable preferred shares				Share-based compensation				Convertible senior notes
						(Note (i))				(Note (ii))				(Note (iii))				(Note (iv))				(Note (v))				(Note (vi))				(Note (vii))
		(RMB in millions)
Cost of revenues			31,689				—				—				—				(139	)			—				(24	)			—				31,526
Selling, general and administrative			11,075				—				—				—				(5	)			—				(92	)			—				10,978
Research and development			11,252				—				—				—				(44	)			—				(202	)			—				11,006
Other income (loss):
- Interest income			4,084				(1,245	)			—				—				—				—				—				—				2,839
- Interest expense			(1,508	)			—				—				—				(158	)			—				—				461				(1,205	)
- Others, net / Share of (losses) income from equity method investments			(1,053	)			1,110				(286	)			3,087				—				475				—				217				3,550
Income before income taxes			13,445				(135	)			(286	)			3,087				30				475				318				678				17,612
Income taxes			2,014				(11	)			(102	)			(5	)			8				(45	)			—								1,859
Net income			11,431				(124	)			(184	)			3,092				22				520				318				678				15,753
Less: net income attributable to noncontrolling interests			495				—				(94	)			—				(2	)			1				16				371				787
Net income attributable to Baidu, Inc.			10,936				(124	)			(90	)			3,092				24				519				302				307				14,966

 

4

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Reconciliation of Consolidated Balance Sheets (Extract)		Amounts as reported under U.S. GAAP				As of December 31, 2023																												Amounts under IFRSs
						IFRS adjustments
						Investments in debt securities				Investments measured at fair value				Equity method investments				Operating leases				Redeemable preferred shares				Share-Based compensation				Convertible senior notes
						(Note (i))				(Note (ii))				(Note (iii))				(Note (iv))				(Note (v))				(Note (vi))				(Note (vii))
		(RMB in millions)
Short-term investments, net			168,670				204				—				—				—				—				—				—				168,874
Long-term investments, net			47,957				—				725				(1,678	)			—				—				—				—				47,004
Long-term time deposits and held-to-maturity investments			24,666				(44	)			—				—				—				—				—				—				24,622
Operating lease right-of-use assets			10,851				—				—				—				(100	)			—				—				—				10,751
Deferred tax assets, net			2,100				—				—				—				7				—				51				—				2,158
Total assets			406,759				160				725				(1,678	)			(93	)			—				51				—				405,924
Convertible senior notes, current portion			2,802				—				—				—				—				—				—				5,060				7,862
Convertible senior notes, non-current portion			8,144				—				—				—				—				—				—				(4,418	)			3,726
Redeemable preferred shares			—				—				—				—				—				9,110				—				—				9,110
Deferred tax liabilities			2,725				42				44				(8	)			—				71				—				—				2,874
Total liabilities			144,151				42				44				(8	)			—				9,181				—				642				154,052
Redeemable noncontrolling interests			9,465				—				—				—				—				(9,465	)			—				—				—
Total Baidu, Inc. shareholders’ equity			243,626				118				400				(1,670	)			(62	)			101				51				(291	)			242,273
Noncontrolling interests			9,517				—				281				—				(31	)			183				—				(351	)			9,599
Total equity			253,143				118				681				(1,670	)			(93	)			284				51				(642	)			251,872

 

5

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Reconciliation of Consolidated Balance Sheets (Extract)		Amounts as reported under U.S. GAAP				As of June 30, 2024																												Amounts under IFRSs
						IFRS adjustments
						Investments in debt securities				Investments measured at fair value				Equity method investments				Operating leases				Redeemable preferred shares				Share-Based compensation				Convertible senior notes
						(Note (i))				(Note (ii))				(Note (iii))				(Note (iv))				(Note (v))				(Note (vi))				(Note (vii))
		(RMB in millions)
Short-term investments, net			106,821				(55	)			—				—				—				—				—				—				106,766
Long-term investments, net			46,193				—				447				1,544				—				—				—				—				48,184
Long-term time deposits and held-to-maturity investments			72,497				77				—				—				—				—				—				—				72,574
Operating lease right-of-use assets			10,919				—				—				—				(71	)			—				—				—				10,848
Deferred tax assets, net			2,342				—				—				—				(1	)			—				51				—				2,392
Total assets			415,527				22				447				1,544				(72	)			—				51				—				417,519
Convertible senior notes, current portion			2,892				—				—				—				—				—				—				4,456				7,348
Convertible senior notes, non-current portion			8,408				—				—				—				—				—				—				(4,481	)			3,927
Redeemable preferred shares			—				—				—				—				—				8,890				—				—				8,890
Deferred tax liabilities			2,940				31				(58	)			(8	)			—				4				—				—				2,909
Total liabilities			142,589				31				(58	)			(8	)			—				8,894				—				(25	)			151,423
Redeemable noncontrolling interests			10,107				—								—				—				(10,107	)			—								—
Total Baidu, Inc. shareholders’ equity			252,769				(9	)			292				1,552				(39	)			1,028				51				11				255,655
Noncontrolling interests			10,062				—				213				—				(33	)			185				—				14				10,441
Total equity			262,831				(9	)			505				1,552				(72	)			1,213				51				25				266,096

 

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Notes:

(i) Investments in debt securities

Under U.S. GAAP, the classification and measurement of debt securities are based on the entity’s investment intent. Debt securities that the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity (HTM) securities and stated at amortized cost less allowance for credit losses. Debt securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and measured at fair value through profit or loss. Debt securities that are not classified as trading or as HTM are classified as available-for-sale (AFS) securities and measured at fair value with unrealized gains and losses recorded in other comprehensive income (loss).

Under IFRSs, the classification and measurement of debt instruments, including debt securities, depends on the instrument’s contractual cash flow (CCF) characteristics and the business model under which they are managed. The assessment of the CCF determines whether the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Debt securities are measured at amortized cost if they pass the CCF characteristics test and are held with the objective of collecting CCF. Debt securities are measured at fair value through other comprehensive income (loss) if they pass the CCF characteristics test and are held with the objective of both collecting CCF and selling financial assets. Debt securities that are not measured at amortized cost or fair value through other comprehensive income (loss) is measured at fair value through profit or loss. Therefore, adjustments were made to the debt securities that should be classified as fair value through profit or loss because they did not meet CCF under IFRSs.

(ii) Investments measured at fair value

Under U.S. GAAP, for equity securities without readily determinable fair value and do not qualify for the net asset value per share practical expedient, the Group elects to use the measurement alternative to measure these investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any.

Available-for-sale debt investments are convertible debt instruments and investments in preferred shares that are currently redeemable at the Group’s option. Under U.S. GAAP, these available-for-sale debt investments are measured at fair value. Interest income is recognized in earnings. All other changes in the carrying amount of these debt investments are recognized in other comprehensive income (loss).

Under IFRSs, these investments were classified as financial assets at fair value through profit or loss and measured at fair value with changes in fair value recognized through profit or loss.

(iii) Equity method investments

The Group as the investor recorded its share of earnings or losses from its equity method investees in accordance with U.S. GAAP. Under IFRS, the accounting policies of the equity method investees must be the same as those of the investor. Therefore, adjustments were made to the Group’s share of earnings or losses of the investees, from U.S. GAAP to IFRSs, for the IFRS reconciliation.

(iv) Operating leases

Under U.S. GAAP, at lease commencement date, the Group classifies a lease as a finance lease or an operating lease. For operating leases, the lease liability is based on the present value of the remaining lease payments using the discount rate determined at lease commencement date, while the right-of-use asset is remeasured at the amount of the lease liability, adjusted for the remaining balance of any lease incentives received cumulative prepaid or accrued rents, unamortized initial direct costs and any impairment. This treatment under US GAAP generally results in expenses being incurred on a straight- line basis over the lease term.

Under IFRSs, all leases are accounted for similar to finance leases under U.S. GAAP where right-of-use assets are generally depreciated on a straight-line basis while lease liabilities are measured under the effective interest method, which results in higher expenses at the beginning of the lease term and lower expenses towards the end of the lease term.

(v) Redeemable preferred shares

Under U.S. GAAP, the Group classified the redeemable preferred shares in redeemable noncontrolling interests (mezzanine-equity), in the consolidated balance sheets, initially recorded at fair value, net of issuance costs. The Group elects to use the effective interest method to account for the changes of redemption value over the period from the date of issuance to the earliest redemption date of the preferred shares.

 

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Under IFRSs, these investments were classified as financial liabilities at fair value through profit or loss and measured at fair value with changes in fair value recognized through profit or loss. The amounts of changes in fair value of the redeemable preferred shares that were attributed to changes in credit risk of the redeemable preferred shares were recognized in other comprehensive income (loss).

(vi) Share-based compensation

Under U.S. GAAP, the Group elects to recognize share-based compensation using the straight-line method for all share-based awards issued with no performance obligations. Under U.S. GAAP, the Group elects to determine the total fair value of the share options by estimating the value of the option subject to graded vesting as a single award using an average expected life.

Under IFRSs, the accelerated method is required to recognize compensation expense for all employee equity awards granted with graded vesting. Under IFRSs, the total fair value of the share options is required to be determined by estimating the value of each vesting tranche separately using a separate expected life.

(vii) Convertible senior notes

Under U.S. GAAP, the convertible debts are measured at amortized cost, with any difference between the initial carrying value and the repayment amount recognized as interest expenses using the effective interest method over the period from the issuance date to the maturity date.

Under IFRSs, the convertible debts were designated as at fair value through profit or loss. The convertible debts were initially recognized at their fair value. Subsequent to initial recognition, changes in fair value of the convertible debts were generally recognized in the profit or loss, except for the portion of change in fair value attributable to changes in credit risk of the convertible debts, which is recognized in other comprehensive income (loss).

Under U.S. GAAP, the classification of the convertible debts as current or non-current is not affected by the holder’s option to convert the convertible debts into an equity instrument. Under the amendments to IAS 1 in 2024, the convertible debts are classified as current if the holder has an option to convert the host liability into the Group’s own equity instruments at any time before maturity, as the Group does not have the right to defer settlement for at least twelve months from the reporting date. The Group applied the amendments retrospectively as required by the amendments to IAS 1.

 

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