Baidu Announces Fourth Quarter and Fiscal Year 2020 Results

BEIJING,Feb. 22,2021 --Baidu,Inc. (NASDAQ: BIDU) ("Baidu" or the "Company"),a leading AI company with strong Internet foundation,today announced unaudited financial results[1] for thefourth quarter and fiscal year ended December 31,2020.

"Baidu ended 2020 on a solid note with our business benefiting from improving macroeconomic environment and the digitalization of industrial Internet. Our focus on innovation through technology is paying off with Baidu Core non-marketing revenue growing 52% year over year in the fourth quarter," said Robin Li,Co-founder and CEO of Baidu. "As we enter 2021,Baidu is well positioned as a leading AI company with strong Internet foundation to seize the huge market opportunities in cloud services,autonomous driving,smart transportation,and other AI opportunities. We also hope to capitalize on our huge Internet reach with more non-marketing services."

"Baidu revenue reached US$16.4 billion with adjusted EBITDA reaching US$4.2 billion in 2020. Despite an unprecedented year,our business returned to growth and our profits were solid in the fourth quarter," said Herman Yu,CFO of Baidu. "Through years of investment in research,AI chip design,developer community,patents and talent development,we are turning AI into innovative use cases. For example,Baidu AI cloud differentiating with AI solutions grew 67% year over year in Q4,reaching an annualized run rate of US$2.0 billion. We will continue to invest heavily in technology to optimize Baidu's long-term growth and pursue our mission to make the world simpler through technology."

Fourth Quarter and Fiscal Year 2020 Financial Highlights

Baidu,Inc.

(In millions except per

Q4

Q3

Q4

FY

FY

ADS,unaudited)

2019

2020

2020

YOY

2019

2020

YOY

RMB

RMB

RMB

US$

RMB

RMB

US$

Total revenues

28,884

28,232

30,263

4,638

5%

107,413

107,074

16,410

(0%)

Operating income

4,655

6,156

4,977

763

7%

6,307

14,340

2,198

127%

Operating income (non-GAAP)[2]

6,753

7,636

7,055

1,081

4%

12,800

21,732

3,331

70%

Net income to Baidu

6,345

13,678

5,174

794

(18%)

2,057

22,472

3,444

992%

Net income to Baidu (non-GAAP)[2]

9,193

6,988

6,868

1,053

(25%)

18,182

22,020

3,375

21%

Diluted earnings per ADS

18.25

39.79

15.05

2.31

(18%)

5.60

64.98

9.96

1060%

Diluted earnings per ADS(non-GAAP)[2]

26.54

20.35

20.08

3.08

(24%)

52.04

63.93

9.80

23%

Adjusted EBITDA[2]

8,175

9,073

8,564

1,312

5%

18,416

27,503

4,215

49%

Adjusted EBITDA margin

28%

32%

28%

28%

17%

26%

26%

Baidu Core

Q4

Q3

Q4

FY

FY

(In millions,unaudited)

2019

2020

2020

YOY

2019

2020

YOY

RMB

RMB

RMB

US$

RMB

RMB

US$

Total revenues

21,711

21,379

23,111

3,542

6%

79,711

78,684

12,059

(1%)

Operating income

6,870

7,404

6,320

969

(8%)

15,261

20,538

3,148

35%

Operating income (non-GAAP)[2]

8,492

8,505

8,031

1,231

(5%)

20,311

26,366

4,041

30%

Net income to Baidu Core

7,433

14,368

6,036

925

(19%)

7,580

26,524

4,065

250%

Net income to Baidu Core (non- GAAP)[2]

9,950

7,486

7,533

1,154

(24%)

22,824

25,192

3,861

10%

Adjusted EBITDA[2]

9,788

9,822

9,422

1,444

(4%)

25,451

31,656

4,851

24%

Adjusted EBITDA margin

45%

46%

41%

41%

32%

40%

40%

[1] Unless otherwise noted,RMB to USD was converted at an exchange rate of RMB6.5250 as of December 31,2020,

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).

Other Highlights

Corporate

The developer community on Baidu Open AI Platform has reached 2.65 million,making it the largest among Chinese Companies,based on a commissioned research. Having a large developer community helps Baidu improve our AI capabilities and better understand the AI usage trend for the industries that Baidu serves.

Baidu holds the largest portfolio of AI patents and patent applications in China,according to CICS-CERT,a research arm of the Ministry of Industry and Information Technology.

Baidu recently released four series of ESG report,detailing its policy on anti-corruption,non-discrimination,privacy protection,data security,talent empowerment and low carbon emission commitment (for more information,please see http://esg.baidu.com/en/index.html).

Baidu's efforts in smart transportation and autonomous driving,including enabling electric vehicles and robotaxis,decrease carbon emission and improve traffic efficiency,road safety and air pollution,which support green energy and environment.

Baidu will hold an extraordinary general meeting on March 1,2021 (for more information,please see https://ir.baidu.com/ir-calendar for more information).

Baidu returned US$581 million to shareholders in Q4 2020,increasing the 2020 share repurchase to US$1.9 billion,compared to US$0.7 billion in 2019. In December,the Company upsized its 2020 Share Repurchase Program to US$4.5 billion,of which US$2.8 billion remains available for repurchase through December 31,2022.

AI Cloud

Baidu has been ranked No. 1 in China's AI public cloud market,according to the latest IDC report for 1H 2020,marking the third time that Baidu has topped the list.

Baidu AI call center solution,powered by Baidu Brain to handle large-scale customer calls with conversational AI,is becoming an industry standard to improve call service quality and operational efficiency. Its first key customer,a major telecom operator,has made two repeat purchases of the AI solution,and the AI solution is being adopted by customers across multiple industries,including airline,financial services,energy and automobile.

Baidu has completed Phase I of the smart transportation project in Guangzhou,which includes the deployment of Apollo V2X smart road infrastructure and Apollo Mobility as a Service (MaaS). The smart transportation project covers 102 intersections in the Huangpu district of Guangzhou,and commercial vehicles entering the vicinity are installing DuerOS powered rearview mirrors,to enable traffic violation enforcement,even if the license plate of a violating vehicle is covered by mud. Apollo MaaS allows local commuters to order Apollo robotaxi and robobus from Baidu App and Baidu Maps (as public transportation) and enables traffic authorities to monitor and prioritize the city's transport services.

Apollo's strategic partnerships in smart transportation with Beijing,Guangzhou,Shanghai and Chongqing,to name a few,are becoming an important milestone for modern cities,serving as the "transportation brain" to enable traffic authorities to better manage and improve traffic efficiency,road safety and air pollution.

At the 2020 Annual ABC Summit,Baidu announced its plan to begin mass production of Kunlun II AI chip later this year,for use in search,industrial AI and smart transportation.

Intelligent Driving

Apollo robotaxi and robobus fleets have serviced over 210,000 rides as of December 2020.

Baidu receives the first driverless testing permit in China and becomes the first Chinese company to receive driverless testing permit both in California and China,bringing Apollo's total autonomous driving licenses in China to 199,reflecting the geographic reach of Apollo's testing scenarios.

Apollo has been named the top Chinese autonomous driving company,leading its peers across all testing categories for the third consecutive year,according to the 2020 Beijing Autonomous Vehicles Road Test Report.

Apollo Self Driving (ASD) is gaining momentum,having signed strategic partnerships with 10 leading local and multinational automakers on services,such as high definition (HD) Maps and automated valet parking (AVP),to power their new passenger vehicles. Apollo autonomous navigation pilot (ANP) has recently began accepting orders,which comes timely with MIIT,China's transportation agency,recently releasing draft regulation to allow highway testing of autonomous driving.

Baidu plans to form an electric vehicle company and use its intelligent driving capabilities to power next generation passenger vehicles. Baidu has entered into a strategic partnership with leading automaker Zhejiang Geely Holding Group,owner of the Volvo and Geely Auto brands,to contribute its expertise in automobile design and manufacturing.

Smart Assistant

DuerOS monthly voice queries reached 6.2 billion and voice queries on Xiaodu devices reached 3.7 billion in December 2020,up 66% year over year.

DuerOS skills store now offers over 4,400 skills in wide ranging genres,and its developer community has reached 47,000.

Xiaodu Smart Display ranked No.1 in smart display shipments globally in Q3 2020,according to market research firms IDC,Strategy Analytics and Canalys.

Mobile Ecosystem

Baidu has strengthened its strong Internet foundation with Baidu App monthly active users (MAUs) reaching 544 million and daily logged in users reaching over 70%,up 18 points from a year ago,in December 2020.

Baidu's AI building blocks are helping creators,publishers and service providers better engage with users and perform user life-time management:

­BJH publisher accounts grew 48% to reached 3.8 million and creators on BJH almost tripled from a year ago. Average daily live streaming sessions on knowledge-centric topics grew 3.5 folds sequentially in December 2020;

­Smart Mini Program MAUs reached 414 million,while the number of SMPs grew 124% year over year in December 2020; and

­Revenue from Managed Page reached 1/3 of Baidu Core's online marketing revenue,up from under 24% a year ago. Over 300,000 Managed Page customers have adopted Baidu marketing cloud,to improve user engagement and conversion.

iQIYI

iQIYI subscribers reached 101.7 million in December 2020,further strengthening iQIYI's foundation to produce entertainment blockbuster originals.

Fourth Quarter 2020 Results

Total revenuesreached RMB 30.3 billion ($4.64 billion),increasing 5% year over year.

Revenue from Baidu Corereached RMB 23.1 billion ($3.54 billion),increasing 6% year over year. Online marketing revenue from Baidu Core was RMB 18.9 billion ($2.90 billion),flat from last year. Non-marketing revenue from Baidu Core reached RMB 4.2 billion ($645 million),increasing 52% year over year,driven by cloud and other services.

Revenue from iQIYIreached RMB 7.5 billion ($1.14 billion),decreasing 1% year over year.

Cost of revenueswas RMB 14.5 billion ($2.23 billion),decreasing 6% year over year,primarily due to a decrease in content costs,traffic acquisition costs,bandwidth costs and the amortization/impairment of intangible assets resulting from business combinations,partially offset by an increase in cost of goods sold.

Selling,general and administrative expenseswere RMB 5.1 billion ($780 million),increasing 29% year over year,primarily due to an increase in promotional expense.

Research and development expensewas RMB 5.7 billion ($869 million),increasing 19% year over year,primarily due to an increase in personnel related expense.

Operating incomewas RMB 5.0 billion ($763 million). Baidu Core operating income was RMB 6.3 billion ($969 million),and Baidu Core operating margin was 27%. Non-GAAP operating income was RMB 7.1 billion ($1.08 billion). Non-GAAP Baidu Core operating income was RMB 8.0 billion ($1.23 billion),and non-GAAP Baidu Core operating margin was 35%.

Total other income,netwas RMB 533 million ($82 million),compared to RMB 699 million last year. Income tax expense was RMB 1.0 billion ($158 million),compared to RMB 304 million last year.

Net income attributable to Baiduwas RMB 5.2 billion ($794 million),and diluted earnings per ADS was RMB 15.05 ($2.31). Net income attributable to Baidu Core was RMB 6.0 billion ($925 million),and net margin for Baidu Core was 26%. Non-GAAP net income attributable to Baidu was RMB 6.9 billion ($1.05 billion). Non-GAAP diluted earnings per ADS was RMB 20.08 ($3.08). Non-GAAP net income attributable to Baidu Core was RMB 7.5 billion ($1.15 billion),and non-GAAP net margin for Baidu Core was 33%.

Adjusted EBITDAwas RMB 8.6 billion ($1.31 billion) and adjusted EBITDA margin was 28%. Adjusted EBITDA for Baidu Core was RMB 9.4 billion ($1.44 billion) and adjusted EBITDA margin for Baidu Core was 41%.

As of December 31,cash,cash equivalents,restricted cash and short-term investments were RMB 162.9 billion ($24.97 billion),and cash,restricted cash and short-term investments excluding iQIYI were RMB 148.6 billion ($22.78 billion). Free cash flow was RMB 3.8 billion ($590 million),and free cash flow excluding iQIYI was RMB 5.4 billion ($827 million).

For more information on the adoption of ASU 2019-02 beginning January 1,please see explanation under "Non-GAAP Financial Measures".

Fiscal Year 2020 Results

Total revenuesreached RMB 107.1 billion ($16.41 billion),which was basically flat from last year.

Revenue from Baidu Corereached RMB 78.7 billion ($12.06 billion),decreasing 1% year over year. Online marketing revenue from Baidu Core was RMB 66.3 billion ($10.16 billion),decreasing 5% year over year. Non-marketing revenue from Baidu Core reached RMB 12.4 billion ($1.90 billion),increasing 28% year over year,driven by cloud and other services.

Revenue from iQIYIreached RMB 29.7 billion ($4.55 billion),increasing 2% year over year. iQIYI membership revenue grew 14% year over year,partially offset by online advertising revenue declining 18% year over year.

Cost of revenueswere RMB 55.2 billion ($8.45 billion),decreasing 12% year over year,primarily due to a decrease in traffic acquisition costs,content costs,sales tax and surcharges and costs of goods sold.

Selling,general and administrative expenses were RMB 18.1 billion ($2.77 billion),decreasing 9% year over year,primarily due to decreases in promotional expense.

Research and development expenses were RMB 19.5 billion ($2.99 billion),increasing 6% year over year,primarily due to an increase in personnel related expenses.

Operating incomewas RMB 14.3 billion ($2.20 billion). Baidu Core operating income was RMB 20.5 billion ($3.15 billion),and Baidu Core operating marginwas 26%. Non-GAAP operating income was RMB 21.7 billion ($3.33 billion). Non-GAAP Baidu Core operating income was RMB 26.4 billion ($4.04 billion),and non-GAAP Baidu Core operating margin was 34%.

Total other income,netwas RMB 8.8 billion ($1.34 billion) for 2020,which included a fair value gain of RMB 11.6 billion from long-term investments. Total other loss,net was of RMB 6.6 billion for 2019,which included a non-cash impairment loss of RMB 8.9 billion from investment in Trip.com.

Income tax expensewas RMB 4.1 billion ($623 million),compared to RMB 1.9 billion in 2019.

Net income attributable to Baiduwas RMB 22.5 billion ($3.44 billion),and diluted earnings per ADS was RMB 64.98 ($9.96). Net income attributable to Baidu Core was RMB 26.5 billion ($4.07 billion),andnet margin for Baidu Core was 34%. Non-GAAP net income attributable to Baidu was RMB 22.0 billion ($3.38 billion),and non-GAAP diluted earnings per ADS amounted to RMB 63.93 ($9.80). Non-GAAP net income attributable to Baidu Core was RMB 25.2 billion ($3.86 billion),and non-GAAP net margin for Baidu Core was 32%.

Adjusted EBITDAwas RMB 27.5 billion ($4.22 billion) and adjusted EBITDA margin was 26%. Adjusted EBITDA to Baidu Core was RMB 31.7 billion ($4.85 billion) and adjusted EBITDA margin for Baidu Core was 40%.

Free cash flowwas RMB 19.1 billion ($2.93 billion),and free cash flow excluding iQIYI was RMB 24.8 billion ($3.80 billion).

Financial Guidance

For the first quarter of 2021,Baidu expects revenues to be between RMB 26.0 billion ($4.0 billion) and RMB 28.5 billion ($4.4 billion),representing a growth rate of 15% to 26% year over year,which assumes that Baidu Core revenue will grow between 26% and 39% year over year. This guidance does not include potential contribution from the acquisition of YY Live.

The above forecast reflects Baidu's current and preliminary view,which is subject to substantial uncertainties.

Conference Call Information

Baidu'smanagement will hold an earnings conference call at 8:15 PM on February 17,2021,U.S. Eastern Time (9:15 AM on February 18,Beijing Time).

Please register in advance of the conference call using the link provided below. Upon registering,you will be provided with participant dial-in numbers,Direct Event passcode and unique registrant ID by email.

For pre-registration,please click http://apac.directeventreg.com/registration/event/3599762. It will automatically direct you to the registration page of "Baidu Q4 2020 Earnings Conference Call",where you may fill in your details for RSVP. If it requires you to enter a participant conference ID,please enter "3599762".

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

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

A replay of the conference call may be accessed by phone at the following number until February 25 2021:

International:

+61 2 8199 0299

Passcode:

3599762

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. 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 first quarter of 2021,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 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. 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 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 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 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 shares,adjusted for related income tax effects,are also excluded.

Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated by dividing non-GAAP net income attributable to Baidu,which is adjusted for accretion for the redeemable non-controlling interests,by the weighted average number of ordinary shares expressed in ADS. Adjusted EBITDA represents operating income excluding depreciation,and share-based compensation expenses.

Free cash flow represents net cash provided by operating activities less capital expenditures. In accordance with the new accounting standard,beginning on January 1,Baidu adopted ASU 2019-02 Improvements to Accounting for Costs of Films and License Agreements for Program Materials,which reclassifies cash outflows for costs incurred to acquire licensed contents from investing activities to operating activities. To increase comparability,fiscal 2019 free cash flow has been retrospectively adjusted to include cash outflows of acquisition of licensed copyrights,which is presented on the same basis as fiscal 2020 and going forward.

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."

Baidu,Inc.

Condensed Consolidated Statements of Income (Loss)

(In millions except for share,per share (or ADS) information,unaudited)

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

2019

2020

2020

2020

2019

2020

2020

RMB

RMB

RMB

US$(2)

RMB

RMB

US$(2)

Revenues:

Online marketing services

20,765

20,201

20,708

3,174

78,093

72,840

11,163

Others

8,119

8,031

9,555

1,464

29,320

34,234

5,247

Total revenues

28,884

28,232

30,263

4,638

107,413

107,074

16,410

Costs and expenses:

Cost of revenues(1)

15,517

12,815

14,522

2,226

62,850

55,158

8,454

Selling,general and administrative(1)

3,956

4,700

5,094

780

19,910

18,063

2,769

Research and development(1)

4,756

4,561

5,670

869

18,346

19,513

2,989

Total costs and expenses

24,229

22,076

25,286

3,875

101,106

92,734

14,212

Operating income

4,655

6,156

4,977

763

6,307

14,340

2,198

Other income (loss):

Interest income

2,096

1,297

1,308

201

6,060

5,358

822

Interest expense

(674)

(755)

(777)

(119)

(2,960)

(3,103)

(476)

Foreign exchange income (loss),net

35

(271)

(346)

(53)

(33)

(660)

(101)

Share of losses from equity methiod investments

(94)

(546)

(151)

(23)

(1,254)

(2,248)

(345)

Others,net

(664)

9,169

499

76

(8,460)

9,403

1,441

Total other income (loss),net

699

8,894

533

82

(6,647)

8,750

1,341

Income (loss) before income taxes

5,354

15,050

5,510

845

(340)

23,090

3,539

Income tax expense

304

1,618

1,026

158

1,948

4,064

623

Net income (loss)

5,050

13,432

4,484

687

(2,288)

19,026

2,916

Net loss attributable to noncontrolling interests

(1,295)

(246)

(690)

(107)

(4,345)

(3,446)

(528)

Net income attributable to Baidu

6,345

13,678

5,174

794

2,057

22,472

3,444

Earnings per ADS (1 Class A ordinary share equals 10 ADSs):

-Basic

18.28

40.21

15.28

2.34

5.68

65.54

10.04

-Diluted

18.25

39.79

15.05

2.31

5.60

64.98

9.96

Earnings per share for Class A and Class B ordinary shares:

-Basic

182.82

402.06

152.77

23.41

56.84

655.36

100.44

-Diluted

182.53

397.88

150.49

23.06

55.96

649.83

99.59

Weighted average number of Class A and Class B ordinary shares outstanding:

Basic

34,586,035

33,982,547

33,690,743

33,743

34,834,497

34,155,426

34,426

Diluted

34,613,834

34,339,438

34,188,564

34,884,854

34,446,139

34,139

(1) Includes share-based compensation expenses as follows:

Cost of revenues

92

81

91

14

327

360

55

Selling,general and administrative

413

403

480

73

1,768

1,897

290

Research and development

1,073

930

1,408

216

3,531

4,471

686

Total share-based compensation expenses

1,578

1,414

1,979

303

5,626

6,728

1,031

(2) All translations from RMB to U.S. dollars are made at a rate of RMB 6.5250 to US$1.00,the exchange rate in effect as of December 30,2020 as set forth in the H.10 statistical release of

The Board of Governors of the Federal Reserve System.

Baidu,Inc.

Condensed Consolidated Balance Sheets

(In millions except for share information,unaudited)

December 31,

2019

2020

2020

RMB

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

33,443

35,782

5,484

Restricted cash

996

758

117

Short-term investments

112,924

126,402

19,372

Accounts receivable,net

7,416

8,668

1,328

Amounts due from related parties

1,594

726

111

Other current assets,net

9,189

11,006

1,687

Total current assets

165,562

183,342

28,099

Non-current assets:

Fixed assets,net

18,311

17,508

2,683

Licensed copyrights,net

6,287

6,435

986

Produced content,net

4,355

6,556

1,005

Intangible assets,net

1,600

2,022

310

Goodwill

18,250

22,248

3,410

Long-term investments,net

69,410

76,233

11,683

Amounts due from related parties

3,564

3,438

527

Deferred tax assets,net

2,193

1,674

257

Operating lease right-of-use assets

7,332

9,804

1,503

Other non-current assets

4,452

3,448

527

Total non-current assets

135,754

149,366

22,891

Total assets

301,316

332,708

50,990

LIABILITIES AND EQUITY

Current liabilities:

Short-term loans

2,618

3,016

462

Accounts payable and accrued liabilities

32,701

36,716

5,627

Customer deposits and deferred revenue

11,062

12,626

1,935

Deferred income

529

158

24

Long-term loans,current portion

737

7,427

1,138

Convertible notes,current portion

-

4,752

728

Notes payable,current portion

5,219

-

-

Amounts due to related parties

2,231

1,324

203

Operating lease liabilities

2,283

2,366

364

Total current liabilities

57,380

68,385

10,481

Non-current liabilities:

Deferred income

17

97

15

Deferred revenue

1,009

686

105

Amounts due to related parties

3,846

3,543

543

Long-term loans

7,804

-

-

Notes payable

38,090

48,408

7,419

Convertible senior notes

12,297

11,927

1,828

Deferred tax liabilities

3,273

3,067

470

Operating lease liabilities

4,486

4,693

719

Other non-current liabilities

299

59

9

Total non-current liabilities

71,121

72,480

11,108

Total liabilities

128,501

140,865

21,589

Redeemable noncontrolling interests

1,109

3,102

475

Equity

Total Baidu shareholders' equity

163,599

182,696

27,999

Noncontrolling interests

8,107

6,045

927

Total equity

171,706

188,741

28,926

Total liabilities,redeemable noncontrolling

interests,and equity

301,990

Baidu,Inc.

Selected Information

(In millions except for per ADS information,unaudited)

Three months ended

December 31,2019 (RMB)

Three months ended

September 30,2020 (RMB)

Three months ended

December 31,2020 (US$)

Baidu

Core

iQIYI

Elim &

adj(2)

Baidu,

Inc.

Baidu

Core

iQIYI

Elim &

adj(2)

Baidu,

Inc.

Baidu

Core

iQIYI

Elim & adj(2)

Baidu,Inc.

Baidu Core

iQIYI

Elim & adj(2)

Baidu,Inc.

Total revenues

21,711

7,497

(324)

28,884

21,379

7,188

(335)

28,232

23,111

7,458

(306)

30,263

3,542

1,144

(48)

4,638

YOY

6%

(1%)

5%

QOQ

8%

4%

7%

Costs and expenses:

Cost of revenues (1)

8,215

7,914

(612)

15,517

6,728

6,363

(276)

12,815

7,997

6,785

(260)

14,522

1,226

1,040

(40)

2,226

Selling,general and administrative (1)

2,575

1,400

(19)

3,956

3,354

1,364

(18)

4,700

3,787

1,317

(10)

5,094

580

202

(2)

780

Research and development (1)

4,051

711

(6)

4,756

3,893

671

(3)

4,007

663

-

5,670

767

102

-

869

Total costs and expenses

14,841

10,025

(637)

24,229

13,975

8,398

(297)

22,076

16,791

8,765

(270)

25,286

2,573

1,344

(42)

3,875

YOY

Cost of revenues

(3%)

(14%)

(6%)

Selling,general and administrative

47%

(6%)

29%

Research and development

24%

(7%)

19%

Cost and expenses

13%

(13%)

4%

Operating income (loss)

6,870

(2,528)

313

4,655

7,404

(1,210)

(38)

6,156

6,320

(1,307)

(36)

4,977

969

(200)

(6)

763

YOY

(8%)

(48%)

7%

QOQ

(15%)

8%

(19%)

Operating margin

32%

(34%)

16%

35%

(17%)

22%

27%

(18%)

16%

Add: total other income (loss),net

624

75

-

699

8,827

67

-

8,894

774

(241)

-

533

119

(37)

-

82

Less: income tax expense

281

23

-

304

1,599

19

-

1,042

(16)

-

1,026

160

(2)

-

158

Less: net (loss) income attributable to NCI

(220)

18

(1093)

(3)

(1,295)

264

13

(523)

(3)

(246)

16

16

(722)

(3)

(690)

3

2

(112)

(3)

(107)

Net income(loss) attributable to Baidu

7,433

(2,494)

1,406

6,345

14,368

(1,175)

485

13,678

6,036

(1,548)

686

5,174

925

(237)

106

794

YOY

(19%)

(38%)

(18%)

QOQ

(58%)

32%

(62%)

Net margin

34%

(33%)

22%

67%

(16%)

48%

26%

(21%)

17%

Non-GAAP financial measures:

Operating income (loss) (non-GAAP)

8,492

(2,052)

6,753

8,505

(831)

7,636

8,031

(940)

7,055

1,231

(144)

1,081

YOY

(5%)

(54%)

4%

QOQf

(6%)

13%

(8%)

Operating margin (non-GAAP)

39%

(27%)

23%

40%

(12%)

27%

35%

(13%)

23%

Net income (loss) attributable to Baidu (non-GAAP)

9,950

(1,901)

9,193

7,486

(830)

6,988

7,533

(1,177)

6,868

1,154

(181)

1,053

YOY

(24%)

(38%)

(25%)

QOQ

1%

42%

(2%)

Net margin (non-GAAP)

46%

(25%)

32%

35%

(12%)

25%

33%

(16%)

23%

Adjusted EBITDA

9,788

(1,926)

8,175

9,822

(711)

9,073

9,422

(822)

8,564

1,444

(126)

1,312

YOY

(4%)

(57%)

5%

QOQ

(4%)

16%

(6%)

Adjusted EBITDA margin

45%

(26%)

28%

46%

(10%)

32%

41%

(11%)

28%

(1) Includes share-based compensation as follows:

Cost of revenues

43

49

92

29

52

81

46

45

91

7

7

14

Selling,general and administrative

220

193

413

187

216

403

255

225

480

39

34

73

Research and development

1,001

72

1,073

846

84

930

1,329

79

1,408

204

12

216

Total share-based compensation

1,264

314

1,062

352

1,630

349

1,979

250

53

303

(2) Relates to intersegment eliminations and adjustments

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

Baidu,unaudited)

Twelve months ended

December 31,2019 (RMB)

Twelve months ended

December 31,2020 (RMB)

Twelve months ended

December 31,Inc.

Total revenues

79,711

28,994

(1,292)

107,413

78,684

29,707

(1,317)

107,074

12,059

4,553

(202)

16,410

YOY

(1%)

2%

(0%)

Costs and expenses:

Cost of revenues (1)

34,019

30,348

(1,517)

62,850

28,368

27,884

(1,094)

55,158

4,348

4,273

(167)

8,454

Selling,general and administrative (1)

14,733

5,237

(60)

19,910

12,931

5,188

(56)

18,063

1,982

795

(8)

2,769

Research and development (1)

15,698

2,667

(19)

18,346

16,847

2,676

(10)

19,581

410

(2)

2,989

Total costs and expenses

64,450

38,252

(1,596)

101,106

58,146

35,748

(1,160)

92,734

8,911

5,478

(177)

14,212

YOY

Cost of revenues

(17%)

(8%)

(12%)

Selling,general and administrative

(12%)

(1%)

(9%)

Research and development

7%

0%

6%

Cost and expenses

(10%)

(7%)

(8%)

Operating income (loss)

15,261

(9,258)

304

6,307

20,538

(6,041)

(157)

14,340

3,148

(925)

(25)

2,198

YOY

35%

(35%)

127%

Operating margin

19%

(32%)

6%

26%

(20%)

13%

Add: total other income (loss),net

(5,680)

(967)

(6,647)

9,693

(943)

-

8,750

1,486

(145)

-

1,341

Less: income tax expense

1,896

52

1,041

23

-

4,064

619

4

-

623

Less: net income (loss) attributable to NCI

105

46

(4,496)

(4,345)

(334)

31

(3,143)

(3)

(3,446)

(50)

5

(483)

(3)

(528)

Net income(loss) attributable to Baidu

7,580

(10,323)

4,800

2,057

26,524

(7,038)

2,986

22,472

4,065

(1,079)

458

3,444

YOY

250%

(32%)

992%

Net margin

10%

(36%)

2%

34%

(24%)

21%

Non-GAAP financial measures:

Operating income (loss) (non-GAAP)

20,311

(7,815)

12,800

26,366

(4,477)

21,732

4,041

(685)

3,331

YOY

30%

(43%)

70%

Operating margin (non-GAAP)

25%

(27%)

12%

34%

(15%)

20%

Net income (loss) attributable to Baidu (non-GAAP)

22,824

(8,765)

18,182

25,192

(5,444)

22,020

3,861

(835)

3,375

YOY

10%

(38%)

21%

Net margin (non-GAAP)

29%

(30%)

17%

32%

(18%)

21%

Adjusted EBITDA

25,451

(7,339)

18,416

31,656

(3,996)

27,503

4,851

(611)

4,215

YOY

24%

(46%)

49%

Adjusted EBITDA margin

32%

(25%)

17%

40%

(13%)

26%

(1) Includes share-based compensation as follows:

Cost of revenues

156

171

327

158

202

360

24

31

55

Selling,general and administrative

1,092

676

1,046

851

1,897

160

130

290

Research and development

3,293

238

3,154

317

4,471

637

49

686

Total share-based compensation

4,541

1,085

5,626

5,358

1,370

6,728

821

210

1,031

(2) Relates to intersegment eliminations and adjustments

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

Baidu,Inc.

Condensed Consolidated Statements of Cash Flows

(In millions,unaudited)

Three months ended

Three months ended

Three months ended

Three months ended

December 31,2019 (RMB)

September 30,2020 (RMB)

December 31,2020 (US$)

Baidu excl. iQIYI

iQIYI

Baidu,Inc.

Baidu excl. iQIYI

iQIYI

Baidu,Inc.

Net cash provided by (used in) operating activities

8,688

2,343

11,031

9,716

(1,929)

7,787

7,546

(1,519)

6,027

1,157

(233)

924

Net cash provided by (used in) investing activities

10,194

(2,089)

8,105

(6,576)

343

(6,233)

(1,196)

281

(915)

(183)

43

(140)

Net cash (used in) provided by financing activities

(1,181)

(259)

(1,440)

(4,387)

238

(4,149)

4,185

8,392

12,577

641

1,286

1,927

Effect of exchange rate changes on cash,cash equivalents and restricted cash

(254)

(178)

(432)

(77)

(113)

(190)

(209)

(32)

(241)

(32)

(5)

(37)

Net increase (decrease) in cash,cash equivalents and restricted cash

17,447

(183)

17,264

(1,324)

(1,461)

(2,785)

10,326

7,122

17,448

1,583

1,091

2,674

Cash,cash equivalents and restricted cash

At beginning of period

10,082

7,093

17,175

16,597

5,280

21,877

15,273

3,819

19,092

2,341

586

2,927

At end of period

27,529

6,910

34,439

15,092

25,599

10,941

36,540

3,924

1,677

5,601

Net cash provided by (used in) operating activities

8,157

(233)

924

Less: Capital expenditures

(652)

(232)

(884)

(1,417)

(90)

(1,507)

(2,151)

(27)

(2,178)

(330)

(4)

(334)

Less: Acquisition of licensed copyrights(1)

(54)

(3,656)

(3,710)

-

-

-

-

-

-

-

-

-

Free cash flow

7,982

(1,545)

6,437

8,299

(2,019)

6,280

5,395

(1,546)

3,849

827

(237)

590

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

(1) Starting from January 1,Baidu adopted ASU 2019-02,Improvements to Accounting for Costs of Films and License Agreements for Program Materials,which reclassifies cash outflows for

costs incurred to acquire licensed contents from investing activities to operating activities. To increase comparability,2019 non-GAAP measure of free cash flow has been retrospectively adjusted to

include cash outflows of acquisition of licensed copyrights,which is presented on the same basis as 2020 and going forward.

Free cash flow,previously reported

8,036

2,111

10,147

8,299

385

8,684

5,395

1,255

6,650

827

192

1,019

Less: Acquisition of licensed copyrights

(54)

(3,710)

-

(2,404)

(2,404)

-

(2,801)

(2,801)

-

(429)

(429)

Free cash flow,revised

7,849

827

(237)

590

Baidu,unaudited)

Twelve months ended

Twelve months ended

Twelve months ended

December 31,2019 (RMB)

December 31,Inc.

Net cash provided by (used in) operating activities

24,552

3,906

28,458

29,611

(5,411)

24,200

4,538

(829)

3,709

Net cash (used in) provided by investing activities

(8,225)

(11,749)

(19,974)

(27,711)

159

(27,552)

(4,247)

24

(4,223)

Net cash (used in) provided by financing activities

(11,753)

7,880

(3,873)

(3,709)

9,374

5,665

(568)

1,437

869

Effect of exchange rate changes on cash,cash equivalents and restricted cash

(112)

113

1

(121)

(91)

(212)

(18)

(14)

(32)

Net increase (decrease) in cash,cash equivalents and restricted cash

4,462

150

4,612

(1,930)

4,031

2,101

(295)

618

323

Cash,cash equivalents and restricted cash

At beginning of period

23,067

6,760

29,827

27,439

4,219

1,059

5,278

At end of period

27,439

25,601

Net cash provided by (used in) operating activities

24,709

Less: Capital expenditures

(5,688)

(740)

(6,428)

(4,843)

(241)

(5,084)

(742)

(37)

(779)

Less: Acquisition of licensed copyrights(1)

(195)

(11,957)

(12,152)

-

-

-

-

-

-

Free cash flow

18,669

(8,791)

9,878

24,768

(5,652)

19,116

3,796

(866)

2,930

Note: Baidu excl. iQIYI represents Baidu,

which reclassifies cash outflows for costs incurred to acquire licensed contents from investing activities to operating activities. To increase comparability,2019

non-GAAP measure of free cash flow has been retrospectively adjusted to include cash outflows of acquisition of licensed copyrights,which is presented on

the same basis as 2020 and going forward.

Free cash flow,previously reported

18,864

3,166

22,030

24,768

4,985

29,753

3,796

764

4,560

Less: Acquisition of licensed copyrights

(195)

(11,152)

-

(10,637)

(10,637)

-

(1,630)

(1,630)

Free cash flow,revised

18,930

Baidu,Inc.

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

(In millions except for ADS and per ADS information,2020 (US$)

Baidu Core

iQIYI

Baidu,Inc.

Baidu Core

iQIYI

Baidu,Inc.

Operating income (loss)

6,528)

4,210)

6,307)

4,977

969

(200)

763

Add: Share-based compensation expenses

1,264

314

1,062

352

1,630

349

1,979

250

53

303

Add: Amortization and impairment of intangible assets(1)

358

162

520

39

27

66

81

18

99

12

3

15

Operating income (loss) (non-GAAP)

8,052)

6,505

(831)

7,031

(940)

7,231

(144)

1,081

Add: Depreciation of fixed assets

1,296

126

1,422

1,317

120

1,437

1,391

118

1,509

213

18

231

Adjusted EBITDA

9,926)

8,822

(711)

9,422

(822)

8,444

(126)

1,312

Net income (loss) attributable to Baidu

7,494)

6,175)

13,548)

5,174

925

(237)

794

Add: Share-based compensation expenses

1,257

314

1,433

1,056

352

1,252

1,618

349

1,802

248

53

275

Add: Amortization and impairment of intangible assets(1)

104

162

208

38

27

55

67

18

78

9

3

12

Add: Disposal loss (gain)(4)

663

-

663

(5)

-

(5)

(28)

-

(28)

(4)

-

(4)

Add: Impairment of long-term investments

507

142

587

-

-

-

147

-

147

23

-

23

Add: Fair value loss (gain) of long-term investments

76

(1)

75

(8,855)

(39)

(8,880)

(380)

(1)

(380)

(58)

-

(58)

Add: Reconciling items on equity method investments(2)

440

10

446

556

3

558

250

9

256

38

1

39

Add: Tax effects on non-GAAP adjustments(3)

(530)

(34)

(564)

328

2

330

(177)

(4)

(181)

(27)

(1)

(28)

Net income (loss) attributable to Baidu (non-GAAP)

9,901)

9,486

(830)

6,177)

6,154

(181)

1,053

Diluted earnings per ADS

18.25

39.79

15.05

2.31

Add: Accretion of the redeemable noncontrolling interests

0.06

0.04

0.08

0.01

Add: Non-GAAP adjustments to earnings per ADS

8.23

(19.48)

4.95

0.76

Diluted earnings per ADS (non-GAAP)

26.54

20.35

20.08

3.08

(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 shares.

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

(4) Includes re-measurement gain or loss of previously held equity interest in a business acquisition

Baidu,Inc.

Operating income (loss)

15,258)

6,041)

14,148

(925)

2,198

Add: Share-based compensation expenses

4,085

5,370

6,728

821

210

1,031

Add: Amortization and impairment of intangible assets(1)

509

358

867

470

194

664

72

30

102

Operating income (loss) (non-GAAP)

20,815)

12,477)

21,041

(685)

3,331

Add: Depreciation of fixed assets

5,140

476

5,616

5,290

481

5,771

810

74

884

Adjusted EBITDA

25,339)

18,996)

27,851

(611)

4,215

Net income (loss) attributable to Baidu

7,323)

2,038)

22,079)

3,444

Add: Share-based compensation expenses

4,515

1,126

5,324

1,078

816

210

932

Add: Amortization and impairment of intangible assets(1)

188

358

419

355

194

479

54

30

74

Add: Disposal loss(4)

429

1

430

210

-

210

32

-

32

Add: Impairment of long-term investments

9,921

169

10,028

2,534

74

2,577

389

11

395

Add: Fair value gain of long-term investments

(854)

(1)

(856)

(12,078)

(40)

(12,103)

(1,851)

(6)

(1,855)

Add: Reconciling items on equity method investments(2)

2,399

33

2,419

2,447

32

2,467

375

5

378

Add: Tax effects on non-GAAP adjustments(3)

(1,354)

(87)

(1,441)

(124)

(36)

(160)

(19)

(6)

(25)

Net income (loss) attributable to Baidu (non-GAAP)

22,765)

18,444)

22,861

(835)

3,375

Diluted earnings per ADS

5.60

64.98

9.96

Add: Accretion of the redeemable noncontrolling interests

0.22

0.26

0.04

Add: Non-GAAP adjustments to earnings per ADS

46.22

(1.31)

(0.20)

Diluted earnings per ADS (non-GAAP)

52.04

63.93

9.80

(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 shares.

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

(4) Includes re-measurement gain or loss of previously held equity interest in a business acquisition

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