Baidu Announces Third Quarter 2021 Results

Author: Baidu, Inc. / 2023-07-23 23:42 / Source: Baidu, Inc.

Baidu Announces Third Quarter 2021 Results

BEIJING,Nov. 17,2021 --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 third quarter ended September 30,2021.

"Baidu is bringing innovation across the consumer,enterprise and public sector with our commitment to AI," said Robin Li,co-founder and CEO of Baidu. "Our AI Cloud is helping businesses better serve customers and move faster with greater efficiency. We are building Baidu Apollo smart transportation and intelligent driving to smoothen traffic congestion,accelerate the move to EV and reduce traffic accidents."

"Baidu Core delivered another solid quarter,powered by our AI cloud revenue growing 73% year over year," said Rong Luo,CFO of Baidu. "With a diversified AI portfolio,including cloud services,smart transportation,smart devices,self-driving,smart EV and robotaxi,we are well positioned for long-term growth."

Third Quarter 2021 Financial Highlights[1]

Baidu,Inc.

(In millions except per

ADS,unaudited)

2020

2021

YOY

QOQ

RMB

US$

Total revenues

28,232

31,350

31,921

4,954

13%

Operating income

6,156

3,463

2,308

358

(63%)

(33%)

Operating income (non-GAAP) 2

7,636

5,653

4,708

731

(38%)

(17%)

Net income (loss) to Baidu

13,678

(583)

(16,559)

(2,570)

2740%

Net income to Baidu (non-GAAP) 2

6,988

5,359

5,090

790

(27%)

(5%)

Diluted earnings (loss) per ADS

39.79

(1.70)

(48.18)

(7.48)

2734%

Diluted earnings per ADS (non-GAAP) 2

20.35

15.41

14.66

2.28

(28%)

(5%)

Adjusted EBITDA 2

9,073

7,295

5,962

925

(34%)

(18%)

Adjusted EBITDA margin

32%

23%

19%

[1] Unless otherwise noted,RMB to USD was converted at an exchange rate of RMB6.4434 as of September 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).

Baidu Core

(In millions,unaudited)

2020

2021

YOY

QOQ

RMB

US$

Total revenues

21,379

24,041

24,661

3,827

15%

Operating income

7,404

4,619

3,718

577

(50%)

(20%)

Operating income (non-GAAP) 2

8,505

6,467

5,823

904

(32%)

(10%)

Net income (loss) to Baidu Core

14,368

172

(15,625)

(2,425)

Net income to Baidu Core (non-GAAP) 2

7,486

5,942

5,855

909

(22%)

(1%)

Adjusted EBITDA2

9,822

7,991

6,994

1,085

(29%)

(12%)

Adjusted EBITDA margin

46%

33%

28%

Other Highlights

Corporate

Q3 21 net loss includes a RMB 18.9 billion non-cash,mark-to-market loss in long-term investments arising from quarterly fair-value adjustment.

ESG:

- Baidu donated RMB 90 million to help Henan province cope with its recent natural disaster.

- Xiaodu launched "visual assistance" to enable visually impaired voice control and on-demand screen-text reading for a smoother audio experience.

- In October,Baidu established a Data Management Committee,to consolidate its existing committees on data management,data privacy & protection and data security,to further improve its policies and oversight around data management.

AI Cloud

Baidu releases end-to-end AI cloud solution,powered by Kunlun AI chip and PaddlePaddle deep learning framework,to help financial services firms digitize and automate their operational processes,enlisting leading customers like China Life and Bank of Jiangsu.

Lijiang,a UNESCO Heritage Site with 800-year old bridges and waterways,is using Baidu smart-city cloud to keep the city safe and clean for visitors. Leveraging the digitalization of tourist areas,Baidu AI solution helps local authorities timely detect and address infractions,e.g.,illegal parking and littering.

Tongxiang,Zhejiang (province) signed with Baidu to enable its manufacturing-based enterprises with Baidu AI solutions,allowing Baidu to further penetrate into industrial Internet.

Baidu ACE smart transportation has been adopted by 24 cities,tripling year over year,based on contract amount over RMB10 million.

Intelligent Driving

Apollo L4 has accumulated over 10 million test miles,up 189% year over year,and has received 411 autonomous driving permits,reflecting Apollo's broad geographic coverage and wide-ranging test scenarios.

Rides provided by Apollo Go doubled sequentially,which are available in Shanghai,Beijing,Guangzhou,Changsha and Cangzhou.

WM Motor,a Chinese EV OEM,signed with Baidu to install Apollo Navigation Pilot (ANP) in its new W6 SUV,taking the total makes that have partnered with Apollo for self-driving and infotainment solutions to 31.

Other Growth Initiatives

Xiaodu ranks No.1 in smart display shipments globally and smart speaker shipments in China for Q2 2021,according to Strategy Analytics,IDC and Canalys.

In August 2021,Xiaodu completed Series B financing at a valuation of US$5.1 billion with Baidu retaining super-majority shareholding.

Mobile Ecosystem

In September,Baidu App's MAUs reached 607 million,up 12% year over year,and daily logged in users reached an all-time high of 79%,reflecting positive user experience.

Managed Page reached 43% of Baidu Core Q3 online marketing revenue,through continuous marketing-cloud enhancements,such as expanded e-commerce features and tools.

The open nature of Baidu's Internet infrastructure is leading to top smartphone makers to select Baidu's smart mini program as the landing page for their browser search.

iQIYI

iQIYI subscribers reached 104 million in September 2021,creating a strong foundation to provide innovative,self-developed blockbusters.

Third Quarter 2021 Financial Results

Total revenues were RMB 31.9 billion ($4.95 billion),increasing 13% year over year.

Revenue from Baidu Core was RMB 24.7 billion ($3.83 billion),increasing 15% year over year; online marketing revenue was RMB 19.5 billion ($3.02 billion),up 6% year over year,and non-online marketing revenue was RMB 5.2 billion ($806 million),up 76% year over year,driven by cloud and other AI-powered businesses.

Revenue from iQIYI was RMB 7.6 billion ($1.18 billion),increasing 6% year over year.

Cost of revenues was RMB 16.1 billion ($2.50 billion),increasing 26% year over year,primarily due to an increase in traffic acquisition costs,content costs and cost of goods sold related to new AI business.

Selling,general and administrative expenses were RMB 7.3 billion ($1.14 billion),increasing 56% year over year,primarily due to an increase in channel spending,promotional marketing,personnel-related expenses and contingent loss pertaining to legal proceeding involving former advertising agency.

Research and development expense was RMB 6.2 billion ($957 million),increasing 35% year over year,primarily related to personnel-related expenses.

Operating income was RMB 2.3 billion ($358 million). Baidu Core operating income was RMB 3.7 billion ($577 million),and Baidu Core operating margin was 15%. Non-GAAP operating income was RMB 4.7 billion ($731 million). Baidu Core non-GAAP operating income was RMB 5.8 billion ($904 million),and Baidu Core non-GAAP operating margin was 24%.

Total other loss,net was RMB 21.5 billion ($3.34 billion),which included a RMB 18.9 billion non-cash,mark-to-market loss in long-term investments. Such quarterly fair-value adjustment may result in further net income volatility in the future.

Income tax benefit was RMB 1.8 billion ($286 million),compared to an income tax expense of RMB 1.6 billion for Q3 '20,primarily due to an increase in deferred tax benefit recognized on fair value loss of long-term investments and deduction on certain expenses that were previously considered non-deductible.

Net loss attributable to Baidu was RMB 16.6 billion ($2.57 billion),and diluted loss per ADS was RMB 48.18 ($7.48). Net loss attributable to Baidu Core was RMB 15.6 billion ($2.43 billion). Non-GAAP net income attributable to Baidu was RMB 5.1 billion ($790 million),and non-GAAP diluted earnings per ADS was RMB 14.66 ($2.28). Non-GAAP net income attributable to Baidu Core was RMB 5.9 billion ($909 million).

Adjusted EBITDA was RMB 6.0 billion ($925 million). Adjusted EBITDA for Baidu Core was RMB 7.0 billion ($1.09 billion) and adjusted EBITDA margin for Baidu Core was 28%.

As of September 30,cash,cash equivalents,restricted cash and short-term investments were RMB 194.6 billion ($30.20 billion),and cash,restricted cash and short-term investments excluding iQIYI were RMB 183.6 billion ($28.49 billion). Free cash flow was RMB 691 million ($108 million),and free cash flow excluding iQIYI was RMB 2.9 billion ($449 million).

Financial Guidance

For the fourth quarter of 2021,Baidu expects revenues to be between RMB 31.0 billion ($4.81 billion) and RMB 34.0 billion ($5.27 billion),representing a growth rate of 2% to 12% year over year,which assumes that Baidu Core revenue will grow between 5% and 16% 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 7:30 AM on November 17,U.S. Eastern Time (8:30 PM on November 17,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/8590343. It will automatically direct you to the registration page of "Baidu Q3 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 " 8590343".

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 November 24 2021:

International:

+61 2 8199 0299

Conference ID:

8590343

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.

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 fourth 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,amortization and impairment of intangible assets resulting from business combinations and contingent loss pertaining to legal proceeding in relation to former advertising agency.

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,contingent loss pertaining to legal proceeding in relation to former advertising agency,disposal gain or loss,impairment of long-term investments,fair value change of long-term investments,charitable donation from Baidu,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

September 30,

June 30,

September 30,

2020

2021

RMB

US$(2)

Revenues:

Online marketing services

20,201

20,828

21,050

3,267

Others

8,031

10,522

10,871

1,687

Total revenues

28,232

31,350

31,921

4,954

Costs and expenses:

Cost of revenues(1)

12,815

15,897

16,126

2,503

Selling,general and administrative(1)

4,700

5,707

7,320

1,136

Research and development(1)

4,561

6,283

6,167

957

Total costs and expenses

22,076

27,887

29,613

4,596

Operating income

6,156

3,463

2,308

358

Other income (loss):

Interest income

1,297

1,342

1,462

227

Interest expense

(755)

(845)

(880)

(137)

Foreign exchange (loss) income,net

(271)

(36)

Share of loss from equity method investments

(546)

(4)

(1)

Others,net

9,169

(2,887)

(22,079)

(3,426)

Total other income (loss),net

8,894

(2,430)

(21,494)

(3,336)

Income (loss) before income taxes

15,050

1,033

(19,186)

(2,978)

Income tax expense (benefit)

1,618

2,197

(1,839)

(286)

Net income (loss)

13,432

(1,164)

(17,347)

(2,692)

Net loss attributable to noncontrolling interests

(246)

(581)

(788)

(122)

Net income (loss) attributable to Baidu

13,678

(583)

(16,559)

(2,570)

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

-Basic

40.21

(1.70)

(48.18)

(7.48)

-Diluted

39.79

(1.70)

(48.18)

(7.48)

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

-Basic

5.03

(0.21)

(6.02)

(0.93)

-Diluted

4.97

(0.21)

(6.02)

(0.93)

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

-Basic

2,719

2,782

2,778

-Diluted

2,747

2,778

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

Cost of revenues

112

Selling,general and administrative

403

483

353

Research and development

930

1,521

921

144

Total share-based compensation expenses

1,414

2,116

1,348

210

(2) All translations from RMB to U.S. dollars are made at a rate of RMB 6.4434 to US$1.00,the exchange rate in effect as of

September 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

40,701

6,317

Restricted cash

758

10,773

1,672

Short-term investments,net

126,402

143,127

22,213

Accounts receivable,net

8,668

8,704

1,351

Amounts due from related parties

726

947

147

Other current assets,net

11,006

11,142

1,728

Total current assets

183,342

215,394

33,428

Non-current assets:

Fixed assets,net

17,508

20,722

3,216

Licensed copyrights,net

6,435

7,293

1,132

Produced content,556

9,598

1,490

Intangible assets,net

2,022

1,769

275

Goodwill

22,248

22,605

3,508

Long-term investments,net

76,233

74,012

11,486

Amounts due from related parties

3,438

3,485

541

Deferred tax assets,net

1,674

2,567

398

Operating lease right-of-use assets

9,804

10,491

1,628

Other non-current assets

3,448

16,420

2,547

Total non-current assets

149,366

168,962

26,221

Total assets

332,708

384,356

59,649

LIABILITIES AND EQUITY

Current liabilities:

Short-term loans

3,016

3,990

619

Accounts payable and accrued liabilities

36,716

40,461

6,279

Customer deposits and deferred revenue

12,626

13,525

2,099

Deferred income

158

Long-term loans,current portion

7,427

659

102

Convertible senior notes,current portion

4,752

4,808

746

Notes payable,current portion

5,793

899

Amounts due to related parties

1,324

1,824

283

Operating lease liabilities

2,366

2,756

428

Total current liabilities

68,385

73,915

11,470

Non-current liabilities:

Deferred income

119

Deferred revenue

686

197

Amounts due to related parties

3,543

3,318

515

Long-term loans

12,768

1,982

Notes payable

48,408

48,438

7,517

Convertible senior notes

11,927

12,671

1,967

Deferred tax liabilities

3,067

3,377

524

Operating lease liabilities

4,693

4,900

760

Other non-current liabilities

Total non-current liabilities

72,480

85,880

13,328

Total liabilities

140,865

159,795

24,798

Redeemable noncontrolling interests

3,102

7,916

1,229

Equity

Total Baidu shareholders' equity

182,696

211,378

32,805

Noncontrolling interests

6,045

5,267

817

Total equity

188,741

216,645

33,622

Total liabilities,redeemable noncontrolling

interests,and equity

332,649

Baidu,Inc.

Selected Information

(In millions,unaudited)

Three months ended

September 30,2020 (RMB)

Three months ended

June 30,2021 (RMB)

Three months ended

September 30,2021 (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

21,379

7,188

(335)

28,232

24,041

7,608

(299)

31,350

24,661

7,589

(329)

31,921

3,827

1,178

(51)

4,954

YOY

15%

13%

QOQ

(0%)

Costs and expenses:

Cost of revenues (1)

6,728

6,363

(276)

12,815

9,289

6,869

(261)

15,897

9,370

7,028

(272)

16,126

1,454

1,091

(42)

2,503

Selling,general and administrative (1)

3,354

1,364

(18)

4,700

4,526

1,185

(4)

5,707

6,089

1,246

(15)

7,320

945

193

(2)

1,136

Research and development (1)

3,893

671

(3)

4,561

5,607

676

6,283

5,484

683

6,167

851

106

957

Total costs and expenses

13,975

8,398

(297)

22,076

19,422

8,730

(265)

27,887

20,943

8,957

(287)

29,613

3,250

1,390

(44)

4,596

YOY

Cost of revenues

39%

10%

26%

Selling,general and administrative

82%

(9%)

56%

Research and development

41%

35%

Cost and expenses

50%

34%

Operating income (loss)

7,404

(1,210)

(38)

6,156

4,619

(1,122)

(34)

3,463

3,718

(1,368)

(42)

2,308

577

(212)

(7)

358

YOY

(50%)

13%

(63%)

QOQ

(20%)

22%

(33%)

Operating margin

35%

(17%)

22%

19%

(15%)

11%

15%

(18%)

Add: total other income (loss),827

8,894

(2,204)

(226)

(2,430)

(21,163)

(331)

(21,494)

(3,285)

(51)

(3,336)

Less: income tax expense (benefit)

1,599

1,167

2,848)

(1,839)

(287)

(286)

Less: net income (loss) attributable to NCI

264

(523)

(3)

(246)

(676)

(3)

(581)

(838)

(3)

(788)

(130)

(3)

(122)

Net income (loss) attributable to Baidu

14,368

(1,175)

485

13,678

172

(1,397)

642

(583)

(15,625)

(1,730)

796

(16,425)

(268)

123

(2,570)

YOY

47%

QOQ

24%

2740%

Net margin

67%

(16%)

48%

(18%)

(2%)

(63%)

(23%)

(52%)

Non-GAAP financial measures:

Operating income (loss) (non-GAAP)

8,505

(831)

7,636

6,467

(780)

5,653

5,823

(1,073)

4,708

904

(166)

731

YOY

(32%)

29%

(38%)

QOQ

(10%)

38%

(17%)

Operating margin (non-GAAP)

40%

(12%)

27%

(10%)

18%

24%

(14%)

15%

Net income (loss) attributable to Baidu

(non-GAAP)

7,486

(830)

6,988

5,942

(1,065)

5,359

5,855

(1,400)

5,090

909

(217)

790

YOY

(22%)

69%

(27%)

QOQ

(1%)

31%

(5%)

Net margin (non-GAAP)

35%

(12%)

25%

(14%)

17%

24%

(18%)

16%

Adjusted EBITDA

9,822

(711)

9,073

7,991

(662)

7,295

6,994

(990)

5,962

1,085

(153)

925

YOY

(29%)

39%

(34%)

QOQ

(12%)

50%

(18%)

Adjusted EBITDA margin

46%

(10%)

32%

33%

(9%)

23%

28%

(13%)

19%

(1) Includes share-based compensation as follows:

Cost of revenues

112

Selling,general and administrative

187

216

403

274

209

483

196

157

353

Research and development

846

930

1,443

1,521

837

921

131

144

Total share-based compensation

1,062

352

1,414

1,786

330

2,067

281

1,348

166

210

(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

September 30,2020 (RMB)

June 30,2021 (RMB)

September 30,2021 (US$)

Baidu

excl.

iQIYI

Baidu,

Inc.

Baidu

excl.

iQIYI

Baidu,

Inc.

Net cash provided by (used in) operating

activities

9,716

(1,929)

7,787

9,362

(1,426)

7,936

5,436

(2,081)

3,355

844

(323)

521

Net cash (used in) provided by investing activities

(6,576)

343

(6,233)

(12,220)

(12,162)

(15,857)

1,885

(13,972)

(2,461)

293

(2,168)

Net cash (used in) provided by financing activities

(4,387)

238

(4,149)

5,256

801

6,057

7,744

867

8,611

1,201

135

1,336

Effect of exchange rate changes on cash,cash

equivalents and restricted cash

(77)

(113)

(190)

(342)

(92)

(434)

(47)

(21)

(68)

(8)

(3)

(11)

Net (decrease) increase in cash,cash

equivalents and restricted cash

(1,324)

(1,461)

(2,785)

2,056

(659)

1,397

(2,724)

650

(2,074)

(424)

102

(322)

Cash,cash equivalents and restricted cash

At beginning of period

16,597

5,280

21,877

44,756

7,395

52,151

46,812

6,736

53,548

7,266

1,045

8,311

At end of period

15,273

3,819

19,092

46,548

44,088

7,386

51,474

6,842

1,147

7,989

Net cash provided by (used in) operating

activities

9,355

844

(323)

521

Less: Capital expenditures

(1,417)

(90)

(1,507)

(2,435)

(61)

(2,496)

(2,548)

(116)

(2,664)

(395)

(18)

(413)

Free cash flow

8,299

(2,019)

6,280

6,927

(1,487)

5,440

2,888

(2,197)

691

449

(341)

108

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.

Operating income (loss)

7,210)

6,122)

3,368)

2,308

577

(212)

358

Add: Share-based compensation expenses

1,062

352

1,786

330

2,067

281

1,348

166

210

Add: Amortization and impairment of intangible assets(1)

Add: Contingent loss(5)

976

151

Operating income (loss) (non-GAAP)

8,505

(831)

7,467

(780)

5,073)

4,708

904

(166)

731

Add: Depreciation of fixed assets

1,317

120

1,437

1,524

118

1,642

1,171

1,254

181

194

Adjusted EBITDA

9,822

(711)

9,991

(662)

7,994

(990)

5,085

(153)

925

Net income (loss) attributable to Baidu

14,175)

13,397)

(583)

(15,730)

(16,425)

(268)

(2,570)

Add: Share-based compensation expenses

1,056

352

1,252

1,777

330

1,947

1,086

281

1,231

169

191

Add: Amortization and impairment of intangible assets(1)

Add: Disposal loss (gain)

(5)

(45)

(28)

Add: Impairment of long-term investments

205

206

3,187

3,202

494

497

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

(8,855)

(39)

(8,880)

3,180

(9)

3,175

18,970

18,974

2,944

2,945

Add: Reconciling items on equity method investments(2)

556

558

190

207

Add: Charitable donation from Baidu(4)

Add: Contingent loss(5)

976

151

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

328

330

363

373

(2,920)

(5)

(2,925)

(453)

(1)

(454)

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

7,486

(830)

6,065)

5,400)

5,090

909

(217)

790

Diluted earnings (loss) per ADS

39.79

(1.70)

(48.18)

(7.48)

Add: Accretion of the redeemable noncontrolling

interests

0.04

0.02

0.49

0.08

Add: Non-GAAP adjustments to earnings per ADS

(19.48)

17.09

62.35

9.68

Diluted earnings per ADS (non-GAAP)

20.35

15.41

14.66

2.28

(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.

(4) This represents non-recurring charitable donation to discrete events.

(5) This represents contingent loss pertaining to legal proceeding involving former advertising agency.