Baidu Announces Second Quarter 2022 Results

Author: Baidu, Inc. / 2023-07-24 00:48 / Source: Baidu, Inc.

Baidu Announces Second Quarter 2022 Results

BEIJING,Aug. 30,2022 -- 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 30,2022.

"Despite a challenging macro environment caused by Covid-19,Baidu Core generated RMB23.2 billion in revenues in the second quarter,while Baidu AI Cloud revenues maintained rapid growth momentum of 31% year over year and 10% quarter over quarter," said Robin Li,Co-founder and CEO of Baidu. "Apollo Go further solidified its position as the world's largest autonomous ride-hailing service provider. Apollo Go completed 287K rides in the second quarter,and accumulated one million rides on July 20,becoming an important alternative means of people's everyday travel in the Yizhuang region of Beijing. Moreover,in a momentous landmark,Apollo Go became the first provider to offer fully driverless ride-hailing services – i.e. completely without human drivers present in the car - on open roads in Chongqing and Wuhan,allowing us to further scale up our operations at an accelerated pace."

"Baidu Core delivered a non-GAAP operating margin of 22% in the second quarter,up from 17% in the first quarter of 2022,as we continued to optimize our costs and enhance operational efficiency," said Rong Luo,CFO of Baidu. "Going forward,we remain committed to quality revenue growth and sustainable business models."

Second Quarter 2022 Financial Highlights[1]

Baidu,Inc.

(In millions except per

ADS,unaudited)

2021

2022

YOY

QOQ

RMB

US$

Total revenues

31,350

28,411

29,647

4,426

(5%)

Operating income

3,463

2,601

3,400

508

(2%)

31%

Operating income (non-GAAP) [2]

5,653

3,996

5,493

820

(3%)

37%

Net (loss) income to Baidu

(583)

(885)

3,637

543

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

5,359

3,879

5,541

827

43%

Diluted (loss) earnings per ADS

(1.70)

(2.87)

9.97

1.49

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

15.41

11.22

15.79

2.36

41%

Adjusted EBITDA [2]

7,295

5,499

7,054

1,053

(3%)

28%

Adjusted EBITDA margin

23%

19%

24%

[1] Unless otherwise noted,RMB to USD was converted at an exchange rate of RMB6.6981 as of June 30,2022,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)

2021

2022

YOY

QOQ

RMB

US$

Total revenues

24,041

21,378

23,160

3,458

(4%)

Operating income

4,619

2,524

3,246

485

(30%)

29%

Operating income (non-GAAP) [2]

6,467

3,686

5,121

765

(21%)

39%

Net income (loss) to Baidu Core

172

(963)

3,716

555

2060%

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

5,942

3,804

5,449

814

(8%)

43%

Adjusted EBITDA[2]

7,991

5,106

6,597

985

(17%)

29%

Adjusted EBITDA margin

33%

24%

28%

Operational Highlights

Corporate

Forbes China placed Baidu on its 2022 China ESG 50 list.

AI Cloud

Baidu AI Cloud was again ranked the No. 1 AI cloud provider,according to IDC's second half of 2021 report on China's public cloud market report,issued in June 2022.

Baidu ACE smart transportation has been adopted by 51 cities,up from 20 cities a year ago,based on contract value of over RMB10 million,as of the end of the second quarter of 2022.

Intelligent Driving

Apollo Go,Baidu's autonomous ride-hailing service,continued its solid progress in scaling operations.

- Apollo Go provided 287K rides in the second quarter of 2022. On July 20,2022， Apollo Go reached one million accumulated rides,serving passengers on open roads.

- Apollo Go started offering fully driverless ride-hailing services on open roads and received the permits to collect fees from the passengers in Chongqing and Wuhan on August 8,2022. This has made Apollo Go the first and only of its kind in China to provide ride-hailing services completely without human drivers present in the car.

- Apollo Go was granted the permits to charge fees for the driverless ride-hailing services on public roads of the Yizhuang region of Beijing on July 20,2022.

- Apollo Go expanded into Hefei (Anhui) on July 11,2022 and Chengdu (Sichuan) on July 22,and is now available in more than ten cities in China,including all the tier-1 cities (Beijing,Shanghai,Guangzhou,Shenzhen) and other major cities.

Baidu unveiled its 6th generation robotaxi vehicle Apollo RT6 in July 2022. RT6 is the first steering wheel-free,all electric model designed for fully driverless autonomous driving. Apollo RT6 is distinct from the previous generations that had otherwise been retrofitted on conventional vehicles.

Other Growth Initiatives

Xiaodu continued to be ranked No.1 in smart speaker shipments in China for 1Q22,according to IDC and Canalys.

Mobile Ecosystem

In June,Baidu App's MAUs reached 628 million,up 8% year over year,and daily logged in users reached 84%.

Revenue from Managed Page grew by 10% year over year and reached 49% of Baidu Core's online marketing revenue in the second quarter of 2022.

iQIYI

iQIYI's average daily number of total subscribing members for the quarter was 98 million,compared to 99 million for the second quarter of 2021 and 101 million for the first quarter of 2022.

Second Quarter 2022 Financial Results

Total revenues were RMB 29.6 billion ($4.43 billion),decreasing 5% year over year.

Revenue from Baidu Core was RMB 23.2 billion ($3.46 billion),decreasing 4% year over year; online marketing revenue was RMB 17.1 billion ($2.55 billion),decreasing 10% year over year primarily due to the resurgence of Covid-19 in certain cities in China,and non-online marketing revenue was RMB 6.1 billion ($906 million),up 22% year over year,driven by cloud and other AI-powered businesses.

Revenue from iQIYI was RMB 6.7 billion ($994 million),decreasing 13% year over year.

Cost of revenues was RMB 15.2 billion ($2.27 billion),decreasing 5% year over year,primarily due to the decrease in content costs,partially offset by the increase in personnel related expense and other costs related to new AI business.

Selling,general and administrative expenses were RMB 4.8 billion ($714 million),decreasing 16% year over year,primarily due to a decrease in channel spending and promotional marketing.

Research and development expense was RMB 6.3 billion ($939 million),which was basically flat from last year.

Operating income was RMB 3.4 billion ($508 million). Baidu Core operating income was RMB 3.2 billion ($485 million),and Baidu Core operating margin was 14%. Non-GAAP operating income was RMB 5.5 billion ($820 million). Non-GAAP Baidu Core operating income was RMB 5.1 billion ($765 million),and non-GAAP Baidu Core operating margin was 22%.

Total other income,net was RMB 151 million ($23 million),compared to a total other loss of RMB 2.4 billion last year,which included a fair value loss of RMB 3.1 billion from long-term investments. In the second quarter of 2022,we recognized a fair value gain of RMB 536 million. A significant portion of long-term investments,including but not limited to investments in equity securities of public and private companies,private equity funds and digital assets,is subject to quarterly fair value adjustments,which may contribute to net income volatility in future periods.

Income tax expense was RMB 25 million ($4 million),decreasing 99% year over year,primarily due to the reversal of certain tax expenses accrued for 2021 based on the 2021 tax return filed in the second quarter of 2022 and an increase in deduction on certain expenses that were considered non-deductible in the second quarter of 2021.

Net income attributable to Baidu was RMB 3.6 billion ($543 million),and diluted earnings per ADS was RMB 9.97 ($1.49). Net income attributable to Baidu Core was RMB 3.7 billion ($555 million). Non-GAAP net income attributable to Baidu was RMB 5.5 billion ($827 million). Non-GAAP diluted earnings per ADS was RMB 15.79 ($2.36). Non-GAAP net income attributable to Baidu Core was RMB 5.4 billion ($814 million),and non-GAAP net margin for Baidu Core was 24%.

Adjusted EBITDA was RMB 7.1 billion ($1.05 billion) and adjusted EBITDA margin was 24%. Adjusted EBITDA for Baidu Core was RMB 6.6 billion ($985 million) and adjusted EBITDA margin for Baidu Core was 28%.

As of June 30,cash,cash equivalents,restricted cash and short-term investments were RMB 189.4 billion ($28.28 billion),and cash,restricted cash and short-term investments excluding iQIYI were RMB 184.5 billion ($27.55 billion). Free cash flow was RMB 5.5 billion ($823 million),and free cash flow excluding iQIYI was RMB 5.5 billion ($826 million).

Conference Call Information

Baidu'smanagement will hold an earnings conference call at 8.00AM on August 30,U.S. Eastern Time (8.00PM on August 30,Beijing Time).

Please register in advance of the conference call using the link provided below. It will automatically direct you to the registration page of "Baidu Inc Q2 2022 Earnings Conference Call". Please follow the steps to enter your registration details,then click "Register". Upon registering,you will then be provided with the dial-in number,thepasscode,and your unique accessPIN. This information will also be emailed to you as a calendar invite.

For pre-registration,please click

https://s1.c-conf.com/diamondpass/10024320-jfgv94.html

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

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

About Baidu

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

Contacts

Investors Relations,Baidu,Inc.

Tel: +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,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 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 agencies and iQIYI's non-recurring employee severance costs.

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 agencies,iQIYI's non-recurring employee severance costs,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,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 measure".

Baidu,Inc.

Condensed Consolidated Statements of (Loss) Income

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

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2021

2022

2021

2022

RMB

US$(2)

RMB

US$(2)

Revenues:

Online marketing services

20,828

16,929

18,268

2,727

38,922

35,197

5,255

Others

10,522

11,482

11,379

1,699

20,562

22,861

3,413

Total revenues

31,350

28,411

29,647

4,426

59,484

58,058

8,668

Costs and expenses:

Cost of revenues(1)

15,897

15,546

15,171

2,265

30,899

30,717

4,586

Selling,general and administrative(1)

5,707

4,656

4,784

714

10,952

9,440

1,409

Research and development(1)

6,283

5,608

6,292

939

11,381

11,900

1,777

Total costs and expenses

27,887

25,810

26,247

3,918

53,232

52,057

7,772

Operating income

3,463

2,601

3,400

508

6,252

6,001

896

Other income (loss):

Interest income

1,342

1,454

1,525

228

2,575

2,979

445

Interest expense

(845)

(710)

(741)

(111)

(1,668)

(1,451)

(217)

Foreign exchange (loss) gain,net

(36)

(11)

(329)

(49)

120

(340)

(51)

Share of losses from equity method investments

(4)

(408)

(603)

(90)

(155)

(1,011)

(151)

Others,net

(2,887)

(3,286)

299

20,475

(2,987)

(446)

Total other (loss) income,net

(2,430)

(2,961)

151

21,347

(2,810)

(420)

Income (loss) before income taxes

1,033

(360)

3,551

531

27,599

3,191

476

Income tax expense

2,197

391

3,731

416

Net (loss) income

(1,164)

(751)

3,526

527

23,868

2,775

414

Net (loss) income attributable to noncontrolling interests

(581)

134

(111)

(16)

(1,202)

Net (loss) income attributable to Baidu

(583)

(885)

3,637

543

25,070

2,752

411

(Loss) earnings per ADS (1 ADS representing 8 Class A ordinary shares):

-Basic

(1.70)

(2.87)

10.06

1.50

73.12

7.23

1.08

-Diluted

(1.70)

(2.87)

9.97

1.49

71.23

7.15

1.07

(Loss) earnings per share for Class A and Class B ordinary shares:

-Basic

(0.21)

(0.36)

1.26

0.19

9.14

0.91

0.14

-Diluted

(0.21)

(0.36)

1.25

0.19

8.90

0.89

0.13

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

-Basic

2,782

2,767

2,780

2,737

2,773

-Diluted

2,811

2,809

2,806

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

Cost of revenues

112

191

167

Selling,general and administrative

483

377

443

954

820

122

Research and development

1,521

864

1,493

222

2,470

2,357

352

Total share-based compensation expenses

2,116

1,323

2,021

302

3,615

3,344

499

(2) All translations from RMB to U.S. dollars are made at a rate of RMB 6.6981 to US$1.00,the exchange rate in effect as of June 30,2022 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,

2021

2022

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

36,850

42,533

6,350

Restricted cash

10,821

11,148

1,664

Short-term investments,net

143,243

135,753

20,267

Accounts receivable,net

9,981

10,034

1,498

Amounts due from related parties

1,368

1,009

151

Other current assets,net

11,052

9,035

1,350

Total current assets

213,315

209,512

31,280

Non-current assets:

Fixed assets,net

23,027

23,318

3,481

Licensed copyrights,net

7,258

6,783

1,013

Produced content,net

10,951

12,527

1,870

Intangible assets,net

1,689

1,510

225

Goodwill

22,605

22,602

3,374

Long-term investments,net

67,332

74,321

11,096

Amounts due from related parties

3,487

3,473

519

Deferred tax assets,net

2,372

2,998

448

Operating lease right-of-use assets

12,065

10,512

1,569

Other non-current assets

15,933

17,563

2,622

Total non-current assets

166,719

175,607

26,217

Total assets

380,034

385,119

57,497

LIABILITIES,REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Current liabilities:

Short-term loans

4,168

4,100

612

Accounts payable and accrued liabilities

41,384

35,783

5,342

Customer deposits and deferred revenue

13,706

13,027

1,945

Deferred income

Long-term loans,current portion

Convertible notes,current

8,013

1,196

Notes payable,current portion

10,505

11,052

1,650

Amounts due to related parties

1,764

1,388

207

Operating lease liabilities

2,862

2,757

413

Total current liabilities

74,488

76,200

11,377

Non-current liabilities:

Deferred income

129

147

Deferred revenue

223

267

Amounts due to related parties

3,268

3,411

509

Long-term loans

12,629

13,291

1,984

Notes payable

43,120

45,353

6,771

Convertible senior notes

12,652

5,990

894

Deferred tax liabilities

3,286

2,950

440

Operating lease liabilities

5,569

4,957

740

Other non-current liabilities

718

1,816

272

Total non-current liabilities

81,594

78,182

11,672

Total liabilities

156,082

154,382

23,049

Redeemable noncontrolling interests

7,148

7,699

1,149

Equity

Total Baidu shareholders' equity

211,459

217,113

32,414

Noncontrolling interests

5,345

5,925

885

Total equity

216,804

223,038

33,299

Total liabilities,redeemable noncontrolling

interests,and equity

380,497

Baidu,Inc.

Selected Information

(In millions,unaudited)

Three months ended

June 30,2021 (RMB)

Three months ended

March 31,2022 (RMB)

Three months ended

June 30,2022 (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

24,041

7,608

(299)

31,350

21,378

7,277

(244)

28,411

23,160

6,657

(170)

29,647

3,458

994

(26)

4,426

YOY

(4%)

(13%)

(5%)

QOQ

(9%)

Costs and expenses:

Cost of revenues (1)

9,289

6,869

(261)

15,897

9,807

5,964

(225)

15,546

10,114

5,248

(191)

15,171

1,511

784

(30)

2,265

Selling,general and administrative (1)

4,526

1,185

(4)

5,707

3,913

745

(2)

4,656

3,990

801

(7)

4,784

595

120

(1)

714

Research and development (1)

5,607

676

6,134

474

5,608

5,810

482

6,292

867

939

Total costs and expenses

19,422

8,730

(265)

27,887

18,854

7,183

(227)

25,810

19,914

6,531

(198)

26,247

2,973

976

(31)

3,918

YOY

Cost of revenues

(24%)

(5%)

Selling,general and administrative

(12%)

(32%)

(16%)

Research and development

(29%)

Cost and expenses

(25%)

(6%)

Operating income (loss)

4,619

(1,122)

(34)

3,524

(17)

2,246

126

3,400

485

508

YOY

(30%)

(2%)

QOQ

29%

34%

31%

Operating margin

19%

(15%)

11%

12%

14%

11%

Add: total other (loss) income,204)

(226)

(2,430)

(3,058)

(2,961)

442

(291)

151

(43)

Less: income tax expense (benefit)

2,167

2,197

374

391

(11)

(1)

Less: net income (loss) attributable to NCI

(676)

(3)

(581)

(3)

134

(17)

(107)

(3)

(111)

(3)

(15)

(3)

(16)

Net income (loss) attributable to Baidu

172

(1,397)

642

(583)

(963)

169

(91)

(885)

3,716

(214)

135

3,637

555

(32)

543

YOY

2060%

(85%)

QOQ

Net margin

(18%)

(2%)

(5%)

(3%)

16%

(3%)

12%

Non-GAAP financial measures:

Operating income (loss) (non-GAAP)

6,467

(780)

5,653

3,686

327

3,996

5,121

344

5,493

765

820

YOY

(21%)

(3%)

QOQ

39%

37%

Operating margin (non-GAAP)

27%

(10%)

18%

17%

14%

22%

19%

Net income (loss) attributable to Baidu

(non-GAAP)

5,942

(1,065)

5,359

3,804

162

3,879

5,449

5,541

814

827

YOY

(8%)

QOQ

43%

(51%)

43%

Net margin (non-GAAP)

25%

(14%)

17%

18%

14%

24%

19%

Adjusted EBITDA

7,991

(662)

7,295

5,106

410

5,499

6,597

429

7,054

985

1,053

YOY

(17%)

(3%)

QOQ

29%

28%

Adjusted EBITDA margin

33%

(9%)

23%

24%

19%

28%

24%

(1) Includes share-based compensation as follows:

Cost of revenues

112

Selling,general and administrative

274

209

483

257

120

377

339

104

443

Research and development

1,443

1,521

804

864

1,431

1,493

213

222

Total share-based compensation

1,786

330

2,106

217

1,323

1,819

202

2,021

272

302

(2) Relates to intersegment eliminations and adjustments

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

Baidu,Inc.

Condensed Consolidated Statements of Cash Flows

(In millions,unaudited)

Three months ended

June 30,2021 (RMB)

March 31,2022 (RMB)

June 30,2022 (US$)

Baidu

excl.

iQIYI

Baidu,

Inc.

Baidu

excl.

iQIYI

Baidu,

Inc.

Net cash provided by (used in) operating

activities

9,362

(1,426)

7,936

3,039

(1,167)

1,872

7,658

7,706

1,143

1,150

Net cash (used in) provided by investing activities

(12,220)

(12,162)

(2,884)

(67)

(2,951)

(3,027)

(653)

(3,680)

(452)

(97)

(549)

Net cash provided by (used in) financing activities

5,256

801

6,057

(644)

2,046

1,402

877

(334)

543

131

(50)

Effect of exchange rate changes on cash,cash

equivalents and restricted cash

(342)

(92)

(434)

(183)

(4)

(187)

1,230

1,305

184

195

Net increase (decrease) in cash,cash

equivalents and restricted cash

2,056

(659)

1,397

(672)

808

136

6,738

(864)

5,874

1,006

(129)

877

Cash,cash equivalents and restricted cash

At beginning of period

44,756

7,395

52,151

44,596

3,075

47,671

43,924

3,883

47,807

6,557

580

7,137

At end of period

46,812

6,736

53,548

43,807

50,662

3,019

53,681

7,563

451

8,014

Net cash provided by (used in) operating

activities

9,150

Less: Capital expenditures

(2,435)

(61)

(2,496)

(1,928)

(51)

(1,979)

(2,124)

(66)

(2,190)

(317)

(10)

(327)

Free cash flow

6,927

(1,487)

5,440

1,111

(1,218)

(107)

5,534

(18)

5,516

826

(3)

823

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,2022 (US$)

Baidu

Core

iQIYI

Baidu,

Inc.

Baidu

Core

iQIYI

Baidu,

Inc.

Operating income (loss)

4,122)

3,524

2,246

126

3,400

485

508

Add: Share-based compensation expenses

1,786

330

2,106

217

1,819

202

2,021

272

302

Add: Amortization and impairment of intangible assets(1)

Operating income (loss) (non-GAAP)

6,467

(780)

5,686

327

3,121

344

5,493

765

820

Add: Depreciation of fixed assets

1,524

118

1,642

1,420

1,503

1,476

1,561

220

233

Adjusted EBITDA

7,991

(662)

7,106

410

5,597

429

7,054

985

1,053

Net income (loss) attributable to Baidu

172

(1,397)

(583)

(963)

169

(885)

3,716

(214)

3,637

555

(32)

543

Add: Share-based compensation expenses

1,777

330

1,947

1,101

217

1,210

1,815

202

1,916

271

286

Add: Amortization and impairment of intangible assets(1)

Add: Disposal (gain) loss

(45)

(28)

(430)

(216)

(25)

(4)

Add: Impairment of long-term investments

205

206

598

183

690

222

228

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

3,180

(9)

3,175

3,037

(1)

3,037

(547)

(546)

(82)

Add: Reconciling items on equity method investments(2)

190

207

456

462

403

455

Add: Charitable donation from Baidu(3)

136

Add: Tax effects on non-GAAP adjustments

363

373

(475)

(3)

(478)

(321)

(319)

(48)

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

5,065)

5,804

162

3,449

5,541

814

827

Diluted (loss) earnings per ADS

(1.70)

(2.87)

9.97

1.49

Add: Accretion of the redeemable noncontrolling interests

0.02

0.31

0.39

0.06

Add: Non-GAAP adjustments to earnings per ADS

17.09

13.78

5.43

0.81

Diluted earnings per ADS (non-GAAP)

15.41

11.22

15.79

2.36

(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 non-recurring charitable donation to discrete events.