Baidu Announces Second Quarter 2021 Results

Author: Baidu, Inc. / 2023-07-23 23:21 / Source: Baidu, Inc.

Baidu Announces Second Quarter 2021 Results

BEIJING,Aug. 12,2021 -- Baidu,Inc. (NASDAQ: BIDU and HKEX: 9888) ("Baidu" or the "Company"),a leading AI company with strong Internet foundation,today announced its unaudited financial results for the second quarter ended June 30,2021.

"Baidu Core delivered another strong quarter,powered by the fast growth of our new AI business. AI enables businesses and local governments to do more and serve more people," said Robin Li,co-founder and CEO of Baidu. "We are excited about the opportunities to help different industries transform their business with AI and support our goal to become carbon neutral by 2030."

"Baidu Core revenue grew 27% year over year in the second quarter,boosted by AI cloud growing 71% year over year," said Herman Yu,CFO of Baidu. "Baidu's search and feed business was solid,and we continue to execute and lead on our new AI business,including AI cloud,autonomous driving and smart assistant."

Second Quarter 2021 Financial Highlights[1]

Baidu,Inc.

(In millions except per

ADS,unaudited)

2020

2021

YOY

QOQ

RMB

US$

Total revenues

26,034

28,134

31,350

4,855

20%

11%

Operating income

3,644

2,789

3,463

536

(5%)

24%

Operating income (non-GAAP) [2]

5,605

4,362

5,653

876

30%

Net income (loss) to Baidu

3,579

25,653

(583)

(90)

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

5,082

4,297

5,359

830

25%

Diluted earnings (loss) per ADS

10.31

73.76

(1.70)

(0.26)

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

14.73

12.38

15.41

2.39

24%

Adjusted EBITDA [2]

7,015

5,900

7,295

1,130

24%

Adjusted EBITDA margin

27%

21%

23%

Baidu Core

(In millions,unaudited)

2020

2021

YOY

QOQ

RMB

US$

Total revenues

18,926

20,483

24,041

3,723

27%

17%

Operating income

4,966

3,847

4,619

715

(7%)

20%

Operating income (non-GAAP) [2]

6,482

5,064

6,467

1,002

(0%)

28%

Net income to Baidu Core

4,424

26,354

172

(96%)

(99%)

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

5,656

4,870

5,942

920

22%

Adjusted EBITDA2

7,771

6,487

7,991

1,238

23%

Adjusted EBITDA margin

41%

32%

33%

[1] Unless otherwise noted,RMB to USD was converted at an exchange rate of RMB6.4566 as of June 30,2021,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

Q2 2021 net loss of RMB 0.6 billion included a RMB 3.1 billion fair value loss from long-term investments,compared to a fair value gain of RMB 23.7 billion in Q1 2021,both primarily related to a mark-to-market adjustment on Kuaishou Technology (see also Total other loss,net below).

ESG: in June,Baidu announced its goal to become carbon neutral by 2030.

- Baidu's low-carbon business practices have been featured in the UN Global Compact Corporate Net Zero Pathway Report.

- Baidu's data center in Yangquan,Shanxi was awarded the carbon neutral data center leader (5A) certification (highest rating of green data centers).

Baidu has returned US$566 million to shareholders under the 2020 Share Repurchase Program this year,bringing the cumulative repurchase to $2.5 billion since 2020.

AI Cloud

Baidu held the Intelligent Economy Summit on July 29th,featuring speakers from leading enterprises and municipalities highlighting the importance of AI to the development of industrial internet,smart city and digital economy.

Baidu was ranked the No. 1 AI cloud provider again,according to IDC's 2020 China's public cloud market report.

Baidu deep learning platform became the most widely used in China,according to an IDC report in June 2021. PaddlePaddle developer community grew to 3.6 million,up 62% year over year,and serves 130,000 businesses.

Baidu signed with Geely Holding,a leading automotive manufacturer,to provide private cloud solution and other cloud applications,to enable Geely to leverage Baidu's AI to optimize its manufacturing capabilities and provide cloud services to its automotive suppliers and customers.

Quanzhou,Fujian with a resident of 8 million,implemented Baidu AI solutions to remotely monitor its water-treatment plant for equipment malfunction and dynamically adjust water pressure,based on predicted usage,cutting electricity use by 8%.

Coverage of Apollo ACE smart transportation has grown to 20 cities in June 2021,up four folds from a year ago,based on contract amounts over RMB 10 million.

Xiongan,Hebei signed with Apollo ACE to deploy V2X smart highway,to remotely detect highway maintenance needs,assess road closure for poor weather conditions and identify travelers who dodge toll terminals.

Intelligent Driving

Apollo L4 autonomous driving accumulated 7.5 million test miles,up 152% year over year. Apollo has received 278 autonomous driving permits,reflecting Apollo's piloting in dispersed geographic regions and under wide-ranging test scenarios.

Baidu introduced Apollo's 5th generation robotaxi vehicles in June,which again saw a 60% drop in cost per mile.

Apollo Go ride hailing expanded into Guangzhou,Guangdong,its fourth city of operation,and provided 47K trips to the public,up 200% sequentially,in Q2. Customer satisfaction has been high,with user rating averaging 4.9 out of 5.0.

Great Wall Motors announced in June that its flagship WEY Mocha SUV will feature Apollo Automated Valet Parking (AVP) in its new release later this year.

Other Growth Initiatives

Xiaodu was ranked No.1 in smart display shipments globally and No.1 in smart speaker shipments in China,according to IDC and Canalys,for Q1 2021.

China's elderly population is slated to exceed 300 million. Xiaodu smart displays connect elders with immediate senior-community assistance and serve as an always-on virtual companionship through conversational AI,improving their quality of life,while allowing family members to remotely monitor their love ones.

Xiaodu's Tiantian T10 (10" smart display with karaoke) was released in May at an MSRP of RMB1,699,exemplifying how hardware can be differentiated with AI features.

Xiaodu services revenue,including advertising and membership,grew 5 folds from last year,accounting for over 10% of Xiaodu Q2 revenue.

Mobile Ecosystem

In June,Baidu MAUs reached 580 million and daily logged in users reaching 77%.

Managed Page reached 40% of Baidu Core Q2 online marketing revenue,as merchants adopted Baidu's hosted service with marketing cloud for their online storefront.

iQIYI

iQIYI subscribers reached 106.2 million in June 2021,serving as a strong foundation to support in-house production of entertainment blockbuster originals.

Second Quarter 2021 Financial Results

Total revenues were RMB 31.4 billion ($4.86 billion),increasing 20% year over year.

Revenue from Baidu Core was RMB 24.0 billion ($3.72 billion),increasing 27% year over year; online marketing revenue was RMB 19.0 billion ($2.95 billion),up 18% year over year,and non-online marketing revenue was RMB 5.0 billion ($771 million),up 80% year over year,driven by cloud and other services.

Revenue from iQIYI was RMB 7.6 billion ($1.18 billion),increasing 3% year over year.

Cost of revenues was RMB 15.9 billion ($2.46 billion),increasing 21% year over year,primarily due to an increase in traffic acquisition costs and cost of goods sold related to new AI business.

Selling,general and administrative expenses were RMB 5.7 billion ($884 million),increasing 29% year over year,primarily due to an increase in channel spending,promotional expenses and personnel-related expenses.

Research and development expense was RMB 6.3 billion ($973 million),increasing 30% year over year,primarily related to personnel-related expenses.

Operating income was RMB 3.5 billion ($536 million). Baidu Core operating income was RMB 4.6 billion ($715 million),and Baidu Core operating margin was 19%. Non-GAAP operating income was RMB 5.7 billion ($876 million). Non-GAAP Baidu Core operating income was RMB 6.5 billion ($1.00 billion),and non-GAAP Baidu Core operating margin was 27%.

Total other loss,net was RMB 2.4 billion ($376 million),which included a fair value loss of RMB 3.1 billion from long-term investments. A significant portion of long-term investments is subject to quarterly mark-to-market adjustment,which may contribute to net income volatility in the future.

Income tax expense was RMB 2.2 billion ($341 million),increasing year over year primarily due to an increase in deferred income tax expense recognized on the fair value gain of certain long-term investments.

Net loss attributable to Baidu was RMB 583 million ($90 million),and diluted loss per ADS was RMB 1.70 ($0.26). Net income attributable to Baidu Core was RMB 172 million ($27 million). Non-GAAP net income attributable to Baidu was RMB 5.4 billion ($830 million),and non-GAAP diluted earnings per ADS was RMB 15.41 ($2.39). Non-GAAP net income attributable to Baidu Core was RMB 5.9 billion ($920 million).

Adjusted EBITDA was RMB 7.3 billion ($1.13 billion). Adjusted EBITDA for Baidu Core was RMB 8.0 billion ($1.24 billion) and adjusted EBITDA margin for Baidu Core was 33%.

As of June 30,cash,cash equivalents,restricted cash and short-term investments were RMB 179.9 billion ($27.87 billion),and cash,restricted cash and short-term investments excluding iQIYI were RMB 167.7 billion ($25.97 billion). Free cash flow was RMB 5.4 billion ($843 million),and free cash flow excluding iQIYI was RMB 6.9 billion ($1.07 billion).

Management Transition

Baidu today is pleased to announce that Herman Yu has been appointed as Chief Strategy Officer (CSO) of the Company,and will be responsible for corporate strategy and business development. Mr. Yu will report to Baidu's CEO Robin Li. Mr. Yu will continue to serve as CFO until the appointment of a new CFO.

Financial Guidance

For the third quarter of 2021,Baidu expects revenues to be between RMB 30.6 billion ($4.7 billion) and RMB 33.5 billion ($5.2 billion),representing a growth rate of 8% to 19% year over year,which assumes that Baidu Core revenue will grow between 9% and 20% year over year.

The COVID-19 situation in China is evolving and business visibility is limited. 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 8:00 AM on August 12,U.S. Eastern Time (8:00 PM on August 12,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/3059294.t will automatically direct you to the registration page of "Baidu Q2 2021 Earnings Conference Call",where you may fill in your details for RSVP. If it requires you to enter a participant conference ID,please enter " 3059294".

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 August 20 2021:

International:

+61 2 8199 0299

Conference ID:

3059294

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 the NASDAQ under "BIDU" and HKEX under "9888". One Baidu ADS represents eight Class A ordinary shares.

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 third 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 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.

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.

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 per share (or ADS) information,unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2020

2021

2020

2021

RMB

US$(2)

RMB

US$(2)

Revenues:

Online marketing services

17,688

18,094

20,828

3,225

31,931

38,922

6,028

Others

8,346

10,040

10,522

1,630

16,648

20,562

3,185

Total revenues

26,034

28,134

31,350

4,855

48,579

59,484

9,213

Costs and expenses:

Cost of revenues(1)

13,134

15,002

15,897

2,462

27,821

30,899

4,785

Selling,general and administrative(1)

4,417

5,245

5,707

884

8,269

10,952

1,697

Research and development(1)

4,839

5,098

6,283

973

9,282

11,381

1,763

Total costs and expenses

22,390

25,345

27,887

4,319

45,372

53,232

8,245

Operating income

3,644

2,789

3,463

536

3,207

6,252

968

Other income (loss):

Interest income

1,312

1,233

1,342

208

2,753

2,575

399

Interest expense

(820)

(823)

(845)

(131)

(1,571)

(1,668)

(258)

Foreign exchange income (loss),net

156

(36)

(6)

(43)

120

Share of loss from equity method investments

(1,732)

(151)

(4)

(1)

(1,551)

(155)

(24)

Others,net

1,551

23,362

(2,887)

(446)

(265)

20,475

3,171

Total other income (loss),net

366

23,777

(2,430)

(376)

(677)

21,347

3,307

Income before income taxes

4,010

26,566

1,033

160

2,530

27,599

4,275

Income tax expense

1,222

1,534

2,197

341

1,420

3,731

578

Net income (loss)

2,788

25,032

(1,164)

(181)

1,110

23,868

3,697

Net loss attributable to noncontrolling interests

(791)

(621)

(581)

(91)

(2,510)

(1,202)

(186)

Net income (loss) attributable to Baidu

3,579

25,653

(583)

(90)

3,620

25,070

3,883

Earnings (loss) per ADS (1 ADS representing 8 Class A ordinary shares):

-Basic

10.34

76.10

(1.70)

(0.26)

10.37

73.12

11.32

-Diluted

10.31

73.76

(1.70)

(0.26)

10.32

71.23

11.03

Earnings (loss) per share for Class A and Class B ordinary shares:

-Basic

1.29

9.51

(0.21)

(0.03)

1.30

9.14

1.42

-Diluted

1.29

9.22

(0.21)

(0.03)

1.29

8.90

1.38

Weighted average number of Class A and Class B ordinary shares outstanding (in millions):

-Basic

2,750

2,692

2,782

2,758

2,737

-Diluted

2,760

2,777

2,771

2,809

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

Cost of revenues

108

112

189

191

Selling,general and administrative

550

471

483

1,014

954

147

Research and development

1,188

949

1,521

236

2,133

2,470

384

Total share-based compensation expenses

1,846

1,499

2,116

329

3,336

3,615

561

(2) All translations from RMB to U.S. dollars are made at a rate of RMB 6.4566 to US$1.00,the exchange rate in effect as of June 30,2021 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,unaudited)

December 31,

2020

2021

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

35,782

42,896

6,644

Restricted cash

758

10,652

1,649

Short-term investments,net

126,402

126,387

19,575

Accounts receivable,net

8,668

9,197

1,424

Amounts due from related parties

726

866

134

Other current assets,net

11,006

9,936

1,539

Total current assets

183,342

199,934

30,965

Non-current assets:

Fixed assets,net

17,508

18,554

2,874

Licensed copyrights,net

6,435

6,714

1,040

Produced content,556

8,676

1,344

Intangible assets,net

2,022

1,883

292

Goodwill

22,248

22,592

3,499

Long-term investments,net

76,233

101,310

15,691

Amounts due from related parties

3,438

3,484

540

Deferred tax assets,674

433

Operating lease right-of-use assets

9,804

10,058

1,558

Other non-current assets

3,448

15,649

2,423

Total non-current assets

149,366

189,353

29,328

Total assets

332,708

389,287

60,293

LIABILITIES AND EQUITY

Current liabilities:

Short-term loans

3,016

3,025

469

Accounts payable and accrued liabilities

36,716

38,276

5,928

Customer deposits and deferred revenue

12,626

13,400

2,075

Deferred income

158

108

Long-term loans,current portion

7,427

915

142

Convertible senior notes,current portion

4,752

4,777

740

Amounts due to related parties

1,324

1,802

279

Operating lease liabilities

2,366

2,495

386

Total current liabilities

68,385

64,798

10,036

Non-current liabilities:

Deferred income

108

Deferred revenue

686

316

Amounts due to related parties

3,543

3,384

524

Long-term loans

12,784

1,980

Notes payable

48,408

47,915

7,421

Convertible senior notes

11,927

12,592

1,950

Deferred tax liabilities

3,067

3,275

507

Operating lease liabilities

4,693

4,696

727

Other non-current liabilities

Total non-current liabilities

72,480

85,161

13,190

Total liabilities

140,865

149,959

23,226

Redeemable noncontrolling interests

3,102

4,814

746

Equity

Total Baidu shareholders' equity

182,696

228,907

35,453

Noncontrolling interests

6,045

5,607

868

Total equity

188,741

234,514

36,321

Total liabilities,redeemable noncontrolling

interests,and equity

332,293

Baidu,Inc.

Selected Information

(In millions,unaudited)

Three months ended

June 30,2020 (RMB)

Three months ended

March 31,2021 (RMB)

Three months ended

June 30,2021 (US$)

Baidu

Core

iQIYI

Elim &

adj(2)

Baidu,

Inc.

Baidu

Core

iQIYI

Elim &

adj(2)

Baidu,

Inc.

Total revenues

18,926

7,412

(304)

26,034

20,483

7,968

(317)

28,134

24,041

7,608

(299)

31,350

3,723

1,178

(46)

4,855

YOY

27%

20%

QOQ

17%

(5%)

11%

Costs and expenses:

Cost of revenues (1)

6,555

6,834

(255)

13,134

8,162

7,109

(269)

15,002

9,289

6,869

(261)

15,897

1,439

1,063

(40)

2,462

Selling,general and administrative (1)

3,230

1,196

(9)

4,417

4,048

1,201

(4)

5,245

4,526

1,185

(4)

5,707

701

184

(1)

884

Research and development (1)

4,175

664

4,839

4,426

672

5,098

5,607

676

6,283

868

105

973

Total costs and expenses

13,960

8,694

(264)

22,390

16,636

8,982

(273)

25,345

19,422

8,730

(265)

27,887

3,008

1,352

(41)

4,319

YOY

Cost of revenues

42%

21%

Selling,general and administrative

40%

(1%)

29%

Research and development

34%

30%

Cost and expenses

39%

25%

Operating income (loss)

4,966

(1,282)

(40)

3,644

3,847

(1,014)

(44)

2,789

4,619

(1,122)

(34)

3,463

715

(174)

(5)

536

YOY

(7%)

(12%)

(5%)

QOQ

20%

11%

24%

Operating margin

26%

(17%)

14%

19%

(13%)

10%

19%

(15%)

11%

Add: total other income (loss),net

507

(141)

366

23,999

(222)

23,777

(2,204)

(226)

(2,430)

(341)

(35)

(376)

Less: income tax expense

1,206

1,513

1,167

2,197

336

341

Less: net (loss) income attributable to NCI

(157)

(637)

(3)

(791)

(21)

(610)

(3)

(621)

(676)

(3)

(581)

(104)

(3)

(91)

Net income (loss) attributable to Baidu

4,424

(1,442)

597

3,579

26,354

(1,267)

566

25,653

172

(1,397)

642

(583)

(216)

(90)

YOY

(96%)

(3%)

QOQ

(99%)

10%

Net margin

23%

(19%)

14%

129%

(16%)

91%

(18%)

(2%)

Non-GAAP financial measures:

Operating income (loss) (non-GAAP)

6,482

(837)

5,605

5,064

(658)

4,362

6,467

(780)

5,653

1,002

(121)

876

YOY

(0%)

(7%)

QOQ

28%

19%

30%

Operating margin (non-GAAP)

34%

(11%)

22%

25%

(8%)

16%

27%

(10%)

18%

Net income (loss) attributable to Baidu

(non-GAAP)

5,656

(956)

5,082

4,870

(1,021)

4,297

5,942

(1,065)

5,359

920

(164)

830

YOY

11%

QOQ

22%

25%

Net margin (non-GAAP)

30%

(13%)

20%

24%

(13%)

15%

25%

(14%)

17%

Adjusted EBITDA

7,771

(716)

7,015

6,487

(543)

5,900

7,991

(662)

7,295

1,238

(103)

1,130

YOY

(8%)

QOQ

23%

22%

24%

Adjusted EBITDA margin

41%

(10%)

27%

32%

(7%)

21%

33%

(9%)

23%

(1) Includes share-based compensation as follows:

Cost of revenues

108

112

Selling,general and administrative

331

219

550

256

215

471

274

209

483

Research and development

1,102

1,188

866

949

1,443

1,521

224

236

Total share-based compensation

1,482

364

1,155

344

1,499

1,786

330

2,116

278

329

(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

June 30,2020 (RMB)

March 31,2021 (RMB)

June 30,2021 (US$)

Baidu

excl.

iQIYI

Baidu,

Inc.

Baidu

excl.

iQIYI

Baidu,

Inc.

Net cash provided by (used in) operating

activities

9,547

(1,358)

8,189

5,467

(1,350)

4,117

9,362

(1,426)

7,936

1,450

(221)

1,229

Net cash (used in) provided by investing activities

(8,854)

1,144

(7,710)

(4,579)

(2,778)

(7,357)

(12,220)

(12,162)

(1,893)

(1,884)

Net cash (used in) provided by financing activities

(2,211)

823

(1,388)

18,018

611

18,629

5,256

801

6,057

813

124

937

Effect of exchange rate changes on cash,cash

equivalents and restricted cash

(10)

251

(29)

222

(342)

(92)

(434)

(53)

(14)

(67)

Net (decrease) increase in cash,cash

equivalents and restricted cash

(1,492)

599

(893)

19,157

(3,546)

15,611

2,056

(659)

1,397

317

(102)

215

Cash,cash equivalents and restricted cash

At beginning of period

18,089

4,681

22,770

25,599

10,941

36,540

44,756

7,395

52,151

6,933

1,145

8,078

At end of period

16,597

5,280

21,877

44,151

46,812

6,736

53,548

7,250

1,043

8,293

Net cash provided by (used in) operating

activities

9,229

Less: Capital expenditures

(797)

(57)

(854)

(1,438)

(61)

(1,499)

(2,435)

(61)

(2,496)

(377)

(9)

(386)

Free cash flow

8,750

(1,415)

7,335

4,029

(1,411)

2,618

6,927

(1,487)

5,440

1,073

(230)

843

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

Baidu,Inc.

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

(In millions except for per ADS information,2021 (US$)

Baidu

Core

iQIYI

Baidu,

Inc.

Baidu

Core

iQIYI

Baidu,

Inc.

Baidu Core

iQIYI

Baidu,

Inc.

Operating income (loss)

4,282)

3,014)

2,122)

3,463

715

(174)

536

Add: Share-based compensation expenses

1,482

364

1,155

344

1,786

330

2,116

278

329

Add: Amortization and impairment of intangible assets(1)

115

Operating income (loss) (non-GAAP)

6,482

(837)

5,064

(658)

4,467

(780)

5,002

(121)

876

Add: Depreciation of fixed assets

1,289

121

1,410

1,423

115

1,538

1,524

118

1,642

236

254

Adjusted EBITDA

7,771

(716)

7,487

(543)

5,991

(662)

7,238

(103)

1,130

Net income (loss) attributable to Baidu

4,442)

3,267)

25,397)

(583)

(216)

(90)

Add: Share-based compensation expenses

1,473

364

1,146

344

1,325

1,777

330

1,947

275

302

Add: Amortization and impairment of intangible assets(1)

Add: Disposal loss (gain)

495

(45)

(28)

(7)

(4)

Add: Impairment of long-term investments

772

800

205

206

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

(2,754)

(23,545)

(88)

(23,590)

3,180

(9)

3,175

493

(1)

491

Add: Reconciling items on equity method investments(2)

1,191

1,197

593

(20)

583

190

207

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

(18)

267

(2)

265

363

373

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

5,656

(956)

5,021)

4,065)

5,359

920

(164)

830

Diluted earnings (loss) per ADS

10.31

73.76

(1.70)

(0.26)

Add: Accretion of the redeemable noncontrolling interests

0.07

0.14

0.02

Add: Non-GAAP adjustments to earnings per ADS

4.35

(61.52)

17.09

2.65

Diluted earnings per ADS (non-GAAP)

14.73

12.38

15.41

2.39

(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) Tax impact of non-GAAP adjustments is separately presented from 2020Q4,with comparative periods retrospectively adjusted.