From the book point of viewBaidu, Inc. (09888.HK, BIDU.US）The performance in the third quarter of 2022 is not very good, because the main contribution to its performance is still online marketing revenue from search engines, but along the way, Baidu, Inc. has focused on smart cloud and smart driving business. these businesses are still in the stage of massive investment, and the revenue generated is not enough to shake the importance of online marketing revenue.

However, according to the information revealed by Robin Li at the results conference in the third quarter of 2022,The spring of smart driving is coming.。

As a rule, let's first take a look at the performance of Baidu, Inc. 's traditional business.

Baidu, Inc. 2022Third of the yearQuarterly results

In the third quarter of 2022, Baidu, Inc. 's core online marketing revenue (excluding iQIYI, Inc. 's online marketing income) fell 4 per cent year-on-year to 18.7 billion yuan (in RMB, the same below), accounting for 57.47 per cent of total revenue.

At the results conference, Li Yanhong admitted that Baidu, Inc. 's income (especially advertising revenue) was affected by the epidemic prevention and control measures. Baidu, Inc. 's core advertising revenue returned to positive growth in August, but in September, advertising revenue declined again as a result of the new epidemic, and overall, the performance in the third quarter was much better than that in the second quarter.

In the fourth quarter, the situation improved in October, but by early November, uncertainty increased due to prevention and control in Guangzhou and Beijing.

In the short term, epidemic prevention and control will have an impact on its core advertising business, but the situation is expected to improve in the coming quarters, and advertising revenue from different areas, including tourism and local services, should pick up as the macroeconomic economy improves.

In contrast, those who are also engaged in the search engine businessAlphabet Inc-CL C (GOOG.US）Alphabet Inc-CL C's advertising revenue in the September 2022 quarter rose 2.54% from a year earlier to $54.482 billion, or about 389.361 billion yuan.

However, Baidu, Inc. 's total income in the third quarter of 2022 rose 1.94 per cent year-on-year to 32.54 billion yuan, thanks to strong growth of 15.88 per cent in other businesses.

In these other businesses,Smart cloud business is growing strongly, with quarterly revenue growth compared with the same period last year24%，至45100 million yuan, accounting for 14% of Baidu, Inc. 's quarterly total income.About; from ACEThe revenue of intelligent transportation is 75.100 million yuan, down 2% from the same period last year, accounting for 23% of total revenueAround。

Management revealed that in the third quarter of 2022, non-advertising revenue accounted for 26% of Baidu, Inc. 's core business revenue, up from 21% in the same period last year, or reflecting Baidu, Inc. 's reliance on traditional search business revenue contribution.

与Tencent (00700, HK)Like many large Internet companies, such as JD.com (09618.HK, JD.US), Baidu, Inc. also promotes profit growth by reducing costs and increasing efficiency, offsetting the negative impact of slowing income growth. In the third quarter of 2022, its sales and administrative expenses fell by 29.06% year-on-year, while R & D expenditure decreased by 6.65%, leading to a year-on-year increase in operating profit of 130.37% to 5.317 billion yuan.

However, the impact of the Fed's interest rate hike on the global primary and secondary capital markets was also reflected in Baidu, Inc. 's financial statements. In the third quarter, it incurred a fair value loss of 3.149 billion yuan on long-term investment and an impairment of 1.23 billion yuan on long-term investment, thus recording a loss attributable to shareholders of 146 million yuan.

If these paper losses and other unsustainable operating items are deducted, Baidu, Inc. 's non-accounting net profit may be 5.889 billion yuan, an increase of 15.70% over the same period last year, profitability has significantly improved compared with the same period last year, and profit margin has increased by 2.15% year-on-year. To 18%, while Alphabet Inc-CL C's net interest rate for the September 2022 fiscal quarter was 20.13%.

The Spring of Baidu, Inc.

As mentioned earlier, Baidu, Inc. 's reliance on advertising revenue generated by traditional search engines has further declined, while the proportion of non-online marketing revenue is gradually increasing, and during this period, his smart driving business, which has been focused on in recent years, seems to have made new progress.

As to when the balance of payments will be reached, judging from Li Yanhong's answer: soon.

The management disclosed at the performance conference that Baidu, Inc. ApolloCumulative sales of automotive solutions have recently exceeded 114100 million yuan, an increase of 50% over last yearAbove. Baidu, Inc. plans to launch pilot assisted driving (ANP) in the second half of next year.) and autonomous parking (AVP), Li Yanhong estimates that 2024From the beginning of 2000, this business will see a significant revenue contribution, and once the revenue is scaled up, profits are expected to expand.

As for the driverless travel service offered by radish express, related orders exceeded 474000 in the third quarter of 2022, up 311 per cent year-on-year and 65 per cent month-on-month. Management indicated that it would expand at a carefully considered pace and that there was a very comprehensive financial model to optimize and forecast the costs and expenses of the business, especially labor costs and hardware expenses. and has been very careful to measure and forecast the cash flow of the business.

In developing the radish fast business, Baidu, Inc. said his strategy is to strengthen the business's leading position in the world and win considerable market share in the ride-hailing industry-especially in China's core cities. because these areas are expected to generate higher profits in the future.

On the other hand, the most important thing is how to reduce costs in order to improve profitability.

As for how to reduce the losses of self-driving travel services, management said that there are two ways to reduce costs in the short term: 1) consider abolishing security guards to reduce labor costs; 2) reduce hardware costs.

How to reduce the cost of hardware?

Management said that when the RT6, launched a few months ago, is put into operation on a large scale in 2024, the unit economic benefits of radish fast will be significantly improved because the production cost of RT6 is much lower than the model previously used by turnip fast.

In addition, the economic effectiveness of the business is improving by scaling up and improving the cost-effectiveness of orders, with 15 orders per car per day in some first-tier cities.

From this point of view, with the substantial expansion of Baidu, Inc. 's smart travel business, Baidu, Inc. 's position in the AI world will be further consolidated, and this business will be where Baidu, Inc. 's future growth lies.

It is precisely because the growth of the business is in sight-the expectation of profits brought about by the scale of revenue in 2024-Baidu, Inc. 's share price soared after the announcement of the results.

However, as a leading company in the field of artificial intelligence, Baidu, Inc. will be more or less affected by recent chip events.

On the question of whether the supply of chips has an impact on its business, management said:

So far, most of its artificial intelligence cloud business does not rely very much on high-end chips; second, it has enough inventory in the short term for businesses that need high-end chips; third, Baidu, Inc. has some alternatives and technologies to use these alternatives to achieve the same efficiency; finally, automotive chips are not on the restricted list, so in the short term, their automotive business should not be affected.

In the medium and long term, Baidu, Inc. has a self-developed AI chip Kunlun core, and has begun to use Kunlun core to support some internal large-scale AI computing tasks. In addition, Baidu, Inc. also uses Kunlun chips to serve external customers. As a full-stack AI enterprise ranging from chips to artificial intelligence architectures to infrastructure models to application software, Baidu, Inc. said he has the ability to optimize the efficiency of its end-to-end AI tasks.