Baidu Announces Third Quarter 2022 Results

Author: Baidu, Inc. / 2023-07-24 01:14 / Source: Baidu, Inc.

Baidu Announces Third Quarter 2022 Results

BEIJING,Nov. 22,2022 -- 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 third quarter ended September 30,2022.

"Baidu Core delivered a solid set of financial and operational results in the third quarter,despite the continued challenges posed by the COVID-19 resurgence. Baidu Core's revenue resumed positive growth,driven by a gradual recovery of our online marketing business and the steady growth of our AI Cloud revenue. Notably,we continued to make significant progress in intelligent driving. On the one hand,Baidu Apollo's auto solutions continued gaining popularity amongst leading automakers. On the other hand,Apollo Go continued scaling up its operation,completing more than 474,000 rides in the quarter,further strengthening its leading position in the global autonomous ride-hailing market," said Robin Li,Co-founder and CEO of Baidu. "Looking ahead,we expect our mobile ecosystem to continue generating strong cash flow and fund our investment in AI Cloud and intelligent driving,which will help maintain our leadership in the new AI business and drive long term business growth."

"In the third quarter of 2022,Baidu Core's non-GAAP operating profit increased by 14% year over year to RMB6.7 billion despite that the resurgence of COVID-19 pressured revenue performance. This achievement is attributable to our relentless efforts in cost optimization and operational efficiency." said Rong Luo,CFO of Baidu. "Going forward,we will continue to focus on quality revenue growth. At the same time,we will keep investing in technology and talents to propel our future development."

Third Quarter 2022 Financial Highlights[1]

Baidu,Inc.

(In millions except per

ADS,unaudited)

2021

2022

YOY

QOQ

RMB

US$

Total revenues

31,921

29,647

32,540

4,574

10%

Operating income

2,308

3,400

5,317

747

130%

56%

Operating income (non-GAAP) [2]

4,708

5,493

7,200

1,012

53%

31%

Net (loss) income to Baidu

(16,559)

3,637

(146)

(21)

(99%)

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

5,090

5,541

5,889

828

16%

Diluted (loss) earnings per ADS

(48.18)

9.97

(0.87)

(0.12)

(98%)

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

14.66

15.79

16.87

2.37

15%

Adjusted EBITDA [2]

5,962

7,054

8,879

1,248

49%

26%

Adjusted EBITDA margin

19%

24%

27%

[1]Unless otherwise noted,RMB to USD was converted at an exchange rate of RMB7.1135 as of September 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 "Reconciliationsof 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

24,661

23,160

25,239

3,548

Operating income

3,718

3,246

4,982

700

34%

53%

Operating income (non-GAAP) [2]

5,823

5,121

6,650

935

14%

30%

Net (loss) income to Baidu Core

(15,625)

3,716

(99%)

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

5,855

5,449

5,767

811

(2%)

Adjusted EBITDA [2]

6,994

6,597

8,239

1,158

18%

25%

Adjusted EBITDA margin

28%

33%

Operational Highlights

Corporate

Baidu returned US$272 million to shareholders since Q3 2022,bringing the cumulative repurchase to $3.2 billion under the 2020 Share Repurchase Program.

AI Cloud

As of the end of the third quarter of 2022,Baidu ACE smart transportation solutions have been adopted by 63 cities,up from 24 cities a year ago,based on the contract value of over RMB10 million for each city.

Intelligent Driving

Baidu Apollo's auto solutions continued to gain traction among leading automakers:

– One of China's largest automotive and technology companies intended to use ANP (Apollo Navigation Pilot),AVP (Automated Valet Parking) and HD Maps for another popular car model. The partnership is an extension of existing collaboration,validating an increasing appetite for ASD (Apollo Self Driving) solutions from automakers.

Apollo Go continued to progress rapidly and remained the largest autonomous ride-hailing service provider worldwide:

– Apollo Go provided more than 474K rides in the third quarter of 2022,up 311% year over year and 65% quarter over quarter. The accumulated rides provided to the public by Apollo Go reached 1.4 million by the third quarter of 2022.

Other Growth Initiatives

Xiaodu ranked No.1 in smart display shipments and smart speaker shipments in China for 2Q22,according to IDC,Strategy Analytics and Canalys.

Mobile Ecosystem

In September,Baidu App's MAUs reached 634 million,up 5% year over year.

Revenue from Managed Page grew by 13% year over year and reached 51% of Baidu Core's online marketing revenue in the third quarter of 2022.

iQIYI

iQIYI's average daily number of total subscribing members for the quarter was 101.0 million,compared to 104.7 million for the third quarter of 2021 and 98.3 million for the second quarter of 2022.

Third Quarter 2022 Financial Results

Total revenueswere RMB 32.5 billion ($4.57 billion),increasing 2% year over year.

Revenue from Baidu Corewas RMB25.2 billion ($3.55 billion),increasing 2% year over year; online marketing revenue was RMB 18.7 billion ($2.63 billion),decreasing 4% year over year but improved 10% from the second quarter as macro has improved gradually since June,and non-online marketing revenue was RMB 6.5 billion ($916 million),up 25% year over year,driven by AI Cloud and other AI-powered businesses.

Revenue from iQIYIwas RMB 7.5 billion ($1.05 billion),decreasing 2% year over year.

Cost of revenueswas RMB 16.3 billion ($2.29 billion),increasing 1% year over year.

Selling,general and administrative expenseswere RMB 5.2 billion ($730 million),decreasing 29% year over year,primarily due to a decrease in channel spending and promotional marketing.

Research and development expense was RMB 5.8 billion ($809 million),decreasing 7% year over year,primarily due to a decrease in staff related expenses.

Operating incomewas RMB 5.3 billion ($747 million). Baidu Core operating income was RMB 5.0 billion ($700 million),and Baidu Core operating margin was 20%. Non-GAAP operating income was RMB 7.2 billion ($1.01 billion). Non-GAAP Baidu Core operating income was RMB 6.7 billion ($935 million),and non-GAAP Baidu Core operating margin was 26%.

Total other loss,netwas RMB 4.8 billion ($670 million),decreasing 78% year over year,which mainly includes a fair value loss of RMB 3.1 billion and an impairment of long-term investments of RMB 1.4 billion. In the third quarter of 2021,we recognized a fair value loss of RMB 18.9 billion. 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 expensewas RMB 908 million ($128 million),compared to an income tax benefit of RMB 1.8 billion for Q3' 21,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 in the third quarter of 2021.

Net loss attributable to Baidu was RMB 146 million ($21 million),and diluted loss per ADS was RMB 0.87 ($0.12). Net income attributable to Baidu Core was RMB 25 million ($4 million). Non-GAAP net income attributable to Baidu was RMB 5.9 billion ($828 million). Non-GAAP diluted earnings per ADS was RMB 16.87 ($2.37). Non-GAAP net income attributable to Baidu Core was RMB 5.8 billion ($811 million),and non-GAAP net margin for Baidu Core was 23%.

Adjusted EBITDAwas RMB 8.9 billion ($1.25 billion) and adjusted EBITDA margin was 27%. Adjusted EBITDA for Baidu Core was RMB 8.2 billion ($1.16 billion) and adjusted EBITDA margin for Baidu Core was 33%.

As of September 30,2022,cash,cash equivalents,restricted cash and short-term investments were RMB 184.5 billion ($25.94 billion),and cash,restricted cash and short-term investments excluding iQIYI were RMB 179.5 billion ($25.23 billion). Free cash flow was RMB 6.6 billion ($921 million),and free cash flow excluding iQIYI was RMB 6.4 billion ($900 million).

Conference Call Information

Baidu'smanagementwill hold an earnings conference call at 7:30AM on November 22,U.S. Eastern Time (8:30PM on November 22,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 Q3 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/10026844-g6c9hw.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.

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 liquidity condition of Baidu and/its subsidiaries and consolidated affiliated entities and their respective ability to fulfill payment obligations when due; 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

September 30,

June 30,

September 30,

2021

2022

RMB

US$(2)

Revenues:

Online marketing services

21,050

18,268

19,943

2,803

Others

10,871

11,379

12,597

1,771

Total revenues

31,921

29,647

32,540

4,574

Costs and expenses:

Cost of revenues(1)

16,126

15,171

16,273

2,288

Selling,general and administrative(1)

7,320

4,784

5,193

730

Research and development(1)

6,167

6,292

5,757

809

Total costs and expenses

29,613

26,247

27,223

3,827

Operating income

2,308

3,400

5,317

747

Other income (loss):

Interest income

1,462

1,525

1,619

228

Interest expense

(880)

(741)

(724)

(102)

Foreign exchange gain (loss),net

(329)

(806)

(113)

Share of losses from equity method investments

(4)

(603)

(376)

(53)

Others,net

(22,079)

299

(4,483)

(630)

Total other (loss) income,net

(21,494)

151

(4,770)

(670)

(Loss) income before income taxes

(19,186)

3,551

547

Income tax (benefit) expense

(1,839)

908

128

Net (loss) income

(17,347)

3,526

(361)

(51)

Net (loss) income attributable to noncontrolling interests

(788)

(111)

(215)

(30)

Net (loss) income attributable to Baidu

(16,559)

3,637

(146)

(21)

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

-Basic

(48.18)

10.06

(0.87)

(0.12)

-Diluted

(48.18)

9.97

(0.87)

(0.12)

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

-Basic

(6.02)

1.26

(0.11)

(0.02)

-Diluted

(6.02)

1.25

(0.11)

(0.02)

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

-Basic

2,778

2,780

2,790

-Diluted

2,811

2,790

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

Cost of revenues

Selling,general and administrative

353

443

480

Research and development

921

1,493

1,039

145

Total share-based compensation expenses

1,348

2,021

1,603

225

(2) All translations from RMB to U.S. dollars are made at a rate of RMB 7.1135 to US$1.00,the exchange rate in effect as of September 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

55,164

7,755

Restricted cash

10,821

11,233

1,579

Short-term investments,net

143,243

118,148

16,609

Accounts receivable,net

9,981

10,677

1,501

Amounts due from related parties

1,368

3,880

545

Other current assets,net

11,052

9,818

1,380

Total current assets

213,315

208,920

29,369

Non-current assets:

Fixed assets,net

23,027

24,251

3,409

Licensed copyrights,net

7,258

7,147

1,005

Produced content,net

10,951

12,712

1,787

Intangible assets,net

1,689

1,453

204

Goodwill

22,605

22,602

3,177

Long-term investments,net

59,417

55,527

7,806

Long-term time deposits and held-to-maturity investments

7,915

22,149

3,114

Amounts due from related parties

3,487

1,521

214

Deferred tax assets,net

2,372

3,209

451

Operating lease right-of-use assets

12,065

10,778

1,515

Other non-current assets

15,933

18,764

2,639

Total non-current assets

166,719

180,113

25,321

Total assets

380,034

389,033

54,690

LIABILITIES,REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Current liabilities:

Short-term loans

4,168

4,977

700

Accounts payable and accrued liabilities

41,384

38,689

5,439

Customer deposits and deferred revenue

13,706

13,984

1,966

Deferred income

Long-term loans,current portion

Convertible notes,current

8,521

1,198

Notes payable,current portion

10,505

12,444

1,749

Amounts due to related parties

1,764

3,482

489

Operating lease liabilities

2,862

2,811

395

Total current liabilities

74,488

84,978

11,946

Non-current liabilities:

Deferred income

129

175

Deferred revenue

223

285

Amounts due to related parties

3,268

1,521

214

Long-term loans

12,629

14,124

1,986

Notes payable

43,120

41,077

5,775

Convertible senior notes

12,652

6,370

895

Deferred tax liabilities

3,286

2,854

401

Operating lease liabilities

5,569

5,165

726

Other non-current liabilities

718

1,692

237

Total non-current liabilities

81,594

73,263

10,299

Total liabilities

156,082

158,241

22,245

Redeemable noncontrolling interests

7,148

8,100

1,139

Equity

Total Baidu shareholders' equity

211,459

217,236

30,539

Noncontrolling interests

5,345

5,456

767

Total equity

216,804

222,692

31,306

Total liabilities,redeemable noncontrolling interests,and equity

380,690

Baidu,Inc.

Selected Information

(In millions,unaudited)

Three months ended

September 30,2021 (RMB)

Three months ended

June 30,2022 (RMB)

Three months ended

September 30,2022 (US$)

Baidu

Core

iQIYI

Elim &

adj(2)

Baidu,

Inc.

Baidu

Core

iQIYI

Elim &

adj(2)

Baidu,

Inc.

Total revenues

24,661

7,589

(329)

31,921

23,160

6,657

(170)

29,647

25,239

7,471

(170)

32,540

3,548

1,050

(24)

4,574

YOY

(2%)

QOQ

12%

10%

Costs and expenses:

Cost of revenues (1)

9,370

7,028

(272)

16,126

10,114

5,248

(191)

15,171

10,745

5,705

(177)

16,273

1,511

802

(25)

2,general and administrative (1)

6,089

1,246

(15)

7,320

3,990

801

(7)

4,784

4,231

980

(18)

5,193

595

138

(3)

730

Research and development (1)

5,484

683

6,167

5,810

482

6,281

476

5,757

742

809

Total costs and expenses

20,943

8,957

(287)

29,613

19,914

6,531

(198)

26,247

20,257

7,161

(195)

27,223

2,848

1,007

(28)

3,827

YOY

Cost of revenues

15%

(19%)

Selling,general and administrative

(31%)

(21%)

(29%)

Research and development

(4%)

(30%)

(7%)

Cost and expenses

(3%)

(20%)

(8%)

Operating income (loss)

3,718

(1,368)

(42)

2,246

126

3,400

4,982

310

5,317

700

747

YOY

34%

130%

QOQ

53%

146%

56%

Operating margin

15%

(18%)

14%

11%

20%

16%

Add: total other (loss) income,net

(21,163)

(331)

(21,494)

442

(291)

151

(4,108)

(662)

(4,770)

(577)

(93)

(670)

Less: income tax (benefit) expense

(1,848)

(1,839)

(11)

866

908

122

128

Less: net income (loss) attributable to NCI

(838)(3)

(788)

(17)

(107)(3)

(111)

(17)

(199)(3)

(215)(3)

(27)(3)

(30)

Net (loss) income attributable to Baidu

(15,625)

(1,730)

796

(16,716

(214)

135

3,637

(395)

224

(146)

(56)

(21)

YOY

(77%)

(99%)

QOQ

(99%)

85%

Net margin

(63%)

(23%)

(52%)

16%

(3%)

12%

(5%)

(0%)

Non-GAAP financial measures:

Operating income (loss) (non-GAAP)

5,823

(1,073)

4,708

5,121

344

5,493

6,650

525

7,200

935

1,012

YOY

14%

53%

QOQ

30%

53%

31%

Operating margin (non-GAAP)

24%

(14%)

15%

22%

19%

26%

22%

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

5,855

(1,400)

5,090

5,449

5,541

5,767

187

5,889

811

828

YOY

(2%)

16%

QOQ

137%

Net margin (non-GAAP)

24%

(18%)

16%

24%

19%

23%

18%

Adjusted EBITDA

6,994

(990)

5,962

6,597

429

7,054

8,239

615

8,879

1,158

1,248

YOY

18%

49%

QOQ

25%

43%

26%

Adjusted EBITDA margin

28%

(13%)

19%

28%

24%

33%

27%

(1) Includes share-based compensation as follows:

Cost of revenues

Selling,general and administrative

196

157

353

339

104

443

375

105

480

Research and development

837

921

1,431

1,493

978

1,039

136

145

Total share-based compensation

1,067

281

1,348

1,819

202

2,398

205

1,603

196

225

(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

September 30,2021 (RMB)

June 30,2022 (RMB)

September 30,2022 (US$)

Baidu excl. iQIYI

iQIYI

Baidu,Inc.

Baidu excl. iQIYI

iQIYI

Baidu,Inc.

Net cash provided by (used in) operating activities

5,436

(2,081)

3,355

7,658

7,706

8,543

196

8,739

1,201

1,229

Net cash (used in) provided by investing activities

(15,857)

1,885

(13,972)

(3,027)

(653)

(3,680)

7,603

407

8,010

1,069

1,126

Net cash provided by (used in) financing activities

7,744

867

8,611

877

(334)

543

(5,967)

(106)

(6,073)

(839)

(15)

(854)

Effect of exchange rate changes on cash,cash

equivalents and restricted cash

(47)

(21)

(68)

1,230

1,305

1,980

2,040

279

287

Net (decrease) increase in cash,cash equivalents

and restricted cash

(2,724)

650

(2,074)

6,738

(864)

5,874

12,159

557

12,716

1,710

1,788

Cash,cash equivalents and restricted cash

At beginning of period

46,812

6,736

53,548

43,924

3,883

47,807

50,662

3,019

53,681

7,122

424

7,546

At end of period

44,088

7,386

51,474

50,681

62,821

3,576

66,397

8,832

502

9,334

Net cash provided by (used in) operating activities

5,229

Less: Capital expenditures

(2,548)

(116)

(2,664)

(2,124)

(66)

(2,190)

(2,140)

(48)

(2,188)

(301)

(7)

(308)

Free cash flow

2,888

(2,197)

691

5,534

(18)

5,516

6,403

148

6,551

900

921

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)

3,368)

2,246

126

3,982

310

5,317

700

747

Add: Share-based compensation expenses

1,067

281

1,819

202

2,398

205

1,603

196

225

Add: Amortization and impairment of intangible assets(1)

Add: Contingent loss(4)

976

214

Operating income (loss) (non-GAAP)

5,073)

4,121

344

5,650

525

7,200

935

1,012

Add: Depreciation of fixed assets

1,171

1,254

1,476

1,561

1,589

1,679

223

236

Adjusted EBITDA

6,994

(990)

5,597

429

7,239

615

8,158

1,248

Net (loss) income attributable to Baidu

(15,730)

(16,716

(214)

3,637

(395)

(146)

(56)

(21)

Add: Share-based compensation expenses

1,086

281

1,231

1,815

202

1,916

1,394

205

1,497

196

210

Add: Amortization and impairment of intangible assets(1)

Add: Disposal (gain) loss

(25)

(6)

(1)

Add: Impairment of long-term investments

3,187

3,202

222

228

1,042

376

1,230

146

173

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

18,970

18,974

(547)

(546)

3,149

(27)

3,135

443

(4)

442

Add: Reconciling items on equity method investments(2)

403

455

237

245

Add: Charitable donation from Baidu(3)

136

Add: Contingent loss(4)

976

214

Add: Tax effects on non-GAAP adjustments

(2,920)

(5)

(2,925)

(321)

(319)

(338)

(336)

(48)

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

5,400)

5,449

5,767

187

5,889

811

828

Diluted (loss) earnings per ADS

(48.18)

9.97

(0.87)

(0.12)

Add: Accretion of the redeemable noncontrolling interests

0.49

0.39

0.45

0.06

Add: Non-GAAP adjustments to earnings per ADS

62.35

5.43

17.29

2.43

Diluted earnings per ADS (non-GAAP)

14.66

15.79

16.87

2.37

(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.

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