Baidu, Inc.-SW (09888) released unaudited financial results for the third quarter ended September 30, 2022, Beijing time. In the third quarter, Baidu, Inc. achieved a revenue of 32.54 billion yuan, an increase of 2% over the same period last year; the net profit (non-GAAP) attributed to Baidu, Inc. reached 5.89 billion yuan, an increase of 16% over the same period last year, exceeding market expectations.

Thanks to the continuous measures to reduce costs and increase efficiency, Baidu, Inc. has improved its business efficiency and its profitability has been repaired quarter by quarter. In the third quarter, Baidu, Inc. 's core operating profit (non-GAAP) rose for the first time since the second quarter of 2021: core operating profit (non-GAAP) rose 14 per cent year-on-year to 6.65 billion yuan, and core operating profit margin (non-GAAP) reached 26.3 per cent.

Despite the continuing challenges posed by the resurgence of the COVID-19 epidemic, the core of Baidu, Inc. recorded sound financial and operating results in the third quarter. Baidu, Inc. 's core revenue is returning to positive growth, driven by the gradual recovery of our online marketing business and the steady growth of smart cloud revenue. It is worth noting that we continue to make major breakthroughs in the smart driving business segment. On the one hand, Baidu, Inc. Apollo automotive solution continues to be recognized by leading automakers. On the other hand, radish Express continues to expand its operation, supplying more than 474000 units in the quarter, further consolidating its leading position in the global self-driving travel service market. " Robin Li, founder, chairman and chief executive of Baidu, Inc., said, "looking ahead, we expect Mobile Ecology to continue to generate strong cash flow to finance our investment in smart cloud and smart driving businesses, thereby consolidating our leading position in our new AI business and driving our future growth."

Luo Rong, chief financial officer of Baidu, Inc., said: "in the third quarter of 2022, despite the pressure on revenue performance caused by the resurgence of the COVID-19 epidemic, Baidu, Inc. 's core operating profit (non-GAAP) increased 14% year-on-year to 6.7 billion yuan. This achievement is attributed to our unremitting efforts to reduce costs and increase efficiency. Looking ahead, we will continue to focus on quality revenue growth. At the same time, we will continue to invest in technology and talents to promote our future development. "

In addition, according to Baidu, Inc. 's financial report, Baidu, Inc. has spent $272 million to buy back shares since the third quarter of 2022, and Baidu, Inc. 's cumulative repurchase amount has reached $3.2 billion based on the share buyback plan that began in 2020.

Baidu, Inc. Intelligent Cloud focuses on high-quality growth, and business health continues to be optimized.

In the third quarter, the epidemic brought challenges to the landing of cloud business, but Baidu, Inc. Smart Cloud still maintained a positive and healthy growth momentum, with revenue growing by 24% year-on-year, higher than the industry average. Baidu, Inc. 's core non-advertising revenue increased by 25% compared with the same period last year.

While expanding the scale of operation, Baidu, Inc. Intelligent Cloud achieved a month-on-month increase in operating profits compared with the same period last year. Thanks to the healthy growth mechanism gradually built by Baidu, Inc. Smart Cloud, Baidu, Inc. Smart Cloud is moving away from low-margin projects and is committed to promoting solution standardization.

Specifically, in the fast-growing vertical markets such as manufacturing, energy, transportation and government affairs, Baidu, Inc. intelligent cloud occupied a favorable position in the early stage. As the IDC report shows, Baidu, Inc. Intelligent Cloud has won the first market share of China's industrial quality inspection solutions for three years in a row and continues to lead China's AI industrial quality inspection market.

In the intelligent transportation scene, Baidu, Inc. intelligent network connection, intelligent traffic management, smart highway, smart parking solutions have helped Beijing, Guangzhou, Changsha, Chongqing and other cities to greatly improve the efficiency of traffic. By the end of the third quarter, Baidu, Inc. 's ACE intelligent transportation solution had been adopted in 63 cities, with a cumulative contract value of more than RMB 10 million, increasing its coverage compared with 24 cities a year ago.

The above business developments, on the one hand, benefit from the fact that Baidu, Inc. Intelligent Cloud has continuously deepened its understanding of specific pain points in the industry during its long-term service to the vertical industry; on the other hand, Baidu, Inc. Intelligent Cloud has formed an intelligent closed-loop path of "chip-framework-big model-industry application" to build end-to-end solutions to better help customers achieve digital and intelligent transformation.

Baidu, Inc. 's success in the field of intelligent transportation proves his ability to improve the productivity of traditional industries through AI. In the future, as Baidu, Inc. replicates this capability to more core industries and further participates in and empowers the transformation of the real economy, Baidu, Inc. will dig into more long-term, high-quality growth space.

Baidu, Inc. Apollo deepened cooperation with head car manufacturers, the cumulative order volume of radish fast running reached 1.4 million.

High-level autopilot technology has high cost and long cycle, and Baidu, Inc. has established the world's leading L4 autopilot differentiation advantage through long-term investment in the field of autopilot.

At present, the market demand for Baidu, Inc. Apollo automobile intelligent solution is growing day by day, and its cumulative fixed point and contract amount is expected to reach 11.4 billion yuan in the near future. In the third quarter, Baidu, Inc. deepened his partnership with one of China's largest automotive technology companies by applying ANP (Apollo pilot assisted driving), AVP (autonomous parking) and Gao Jing Maps to one of its popular models, once again proving automakers' preference for Apollo self-driving solution (ASD).

On the other hand, the operation scale of Baidu, Inc. 's self-driving travel service platform radish express continues to expand, continuing to maintain its position as the world's largest self-driving travel service provider. In the third quarter, turnip Express provided a total of 474000 rides, an increase of 311 per cent year-on-year and 65 per cent month-on-month. By the end of the third quarter of 2022, turnip Express had provided a cumulative total of 1.4 million rides to the public. Self-driving travel services are going deep into users' lives, with radish fast running averaging more than 15 rides per car per day in Beijing, Shanghai and Guangzhou.

With the expansion of the business territory, radish fast run continues to learn and improve from new scenarios, through large-scale operations to promote technology iteration to achieve a virtuous circle. In addition, radish fast running's continued safety record on open roads will provide strong support for more cities to issue complete self-driving licenses.

Mobile ecology contributes strong cash flow and continues to invest in scientific and technological innovation.

In terms of mobile ecology, Baidu, Inc. still maintained the growth of operating profits compared with the same period last year, resulting in strong cash flow. In September, Baidu, Inc. 's App MAU reached 634 million, up 5 per cent from a year earlier. In the third quarter, the number of mobile search queries achieved double-digit growth compared with the same period last year, and Baidu, Inc. 's content distribution of App information streams increased by 23% compared with the same period last year. In the field of e-commerce, users' willingness to go to Baidu, Inc. App for product search has been further enhanced, and product-related search queries continue to increase. In the third quarter, the quarterly GMV driven by Baidu, Inc. search grew by 52 per cent compared with the same period last year.

In other businesses, according to market data from IDC, Strategy Analytics and Canalys, Xiaodu continued to be number one in shipments of smart speakers and screens in China in the second quarter of 2022.

Overall, Baidu, Inc. is achieving stable cash flow by controlling costs and optimizing efficiency to focus on long-term investments in technology areas such as Baidu, Inc. 's smart cloud and self-driving. Baidu, Inc. recorded a free cash flow of 6.6 billion yuan in the third quarter. By the end of the third quarter, Baidu, Inc. had a total of 184.5 billion yuan in cash, cash equivalents, restricted cash and short-term investments.

Growth is driven by innovation. With the release of the large-scale capacity of artificial intelligence, Baidu, Inc. will open up long-term high-quality growth space and help Qianhang hundred industries enter a new stage of development.