On the afternoon of August 22nd, Baidu released its unaudited financial report for the second quarter ending on June 30th, 2023. The total revenues reached $4.70 billion, increasing 15% year over year. Non-GAAP net profit attributable to Baidu amounted to $11 billion, increasing by 44% compared to the previous year. This data was at 22% in the same period last year and 23% in the first quarter of this year. According to the financial report, Baidu‘s core online marketing revenue was $2.69 billion, growing by 15% compared to last year. Baidu‘s core operations generated approximately $260 million in net cash flow.
In the second quarter of 2023, “Baidu Core experienced a boost in revenue and profit growth due to strong online marketing performance and operational leverage,” explained Baidu‘s Co-founder and CEO, Robin Li. He emphasized the transformative potential of generative AI and large language models across industries, underscoring their commitment to constant model improvement, enhanced creativity, training efficiency, and reduced inference costs. Baidu‘s latest model, ERNIE 3.5, has gained recognition from cloud customers, AI developers, and industry experts. The company’s AI-native approach drives product reinvention for innovative experiences and support to enterprises, reflecting their dedication to fostering sustainable long-term growth through generative AI and LLM.
“Baidu Core’s non-GAAP operating profit surged by 27% compared to a year ago, alongside an increase in non-GAAP operating margin from 22% to 25%, surpassing the 23% margin of the previous quarter,” explained Rong Luo, Baidu‘s CFO. He highlighted that Baidu Core generated approximately $13.3 billion in net cash from operating activities during the quarter. These improvements in profit, margins, and cash generation primarily resulted from accelerated revenue and enhanced efficiency. Rong Luo further emphasized Baidu‘s decade-long investment in AI, positioning the company to capitalize on emerging opportunities, particularly in the realm of generative AI and large language models, in the upcoming quarters.
From the perspective of business segments, Baidu‘s core businesses such as Baidu Intelligent Cloud, Intelligent Driving, and User Products maintained a growth trend in the second quarter. Baidu recently unveiled ERNIE 3.5, the latest foundation model powering its advanced conversational AI, ERNIE Bot. According to IDC’s July 2023 report, ERNIE 3.5 excels in algorithms, industry coverage, developer tools, and ecosystem strength.
In another achievement, Baidu earned a spot in the S&P Global Sustainability Yearbook’s China edition for its exceptional ESG scores. This recognition reflects Baidu‘s sustainability efforts after being evaluated among 1,600 Chinese companies in the S&P Global 2022 Corporate Sustainability Assessment.
At the AI Cloud level, the PaddlePaddle developer community has surged to 8 million members in mid-August 2023, enhancing Baidu‘s self-developed open-source deep learning framework’s popularity. Baidu solidified its position as China’s top AI Cloud provider for the fourth year in a row, according to IDC’s 2022 report on the country’s public cloud market.
In terms of autonomous driving, Baidu‘s autonomous ride-hailing service, Apollo Go, demonstrated remarkable growth in Q2 2023, offering approximately 714,000 rides—an impressive 149% surge compared to the previous year. The cumulative rides provided to the public by Apollo Go surpassed 3.3 million as of June 30, 2023.
Apollo Go achieved significant milestones in expanding its fully driverless ride-hailing services. In June, it received the green light to operate fully driverless rides for the public in the Shenzhen Pingshan area, adding to its existing permissions in Beijing, Shenzhen, Wuhan, and Chongqing. Furthermore, Apollo Go gained permits for fully driverless testing on public roads in the Shanghai Pudong area in July.
At the user product level, Baidu‘s monthly active users of the Baidu App reached 677 million in June, an increase of 8% year-on-year. According to data from IDC and Canalys, Xiaodu ranked first in terms of shipment volume for smart screens and smart speakers in China’s first quarter of 2023.
In the field of AI, Baidu is currently conducting internal testing for features such as “AI Companion” and “AI BOT” in Baidu Search. Currently, Baidu Search receives over 50 million new question-and-answer demands on a daily basis.
In May, Baidu announced the internal testing of “AI Document Assistant” on Baidu Wenku, which utilizes AI technologies such as large models to reconstruct traditional learning and office modes. Baidu Marketing’s AIGC commercial creative platform “Qingduo” can generate a digital human model in 3 minutes and produce a complete digital population video in 5 minutes through multimodal content generation, improving the efficiency of commercial advertising monetization.