Performance summary: Baidu Group's revenue for the fourth quarter of 2023 was 35 billion yuan, up 6% year on year; non-GAAP net profit was 7.8 billion yuan, up 44% year on year.
Performance continues to grow. On the revenue side, the company's revenue for the fourth quarter of 2023 was 35 billion yuan, an increase of 6% over the previous year. On the profit side, we achieved non-GAAP net profit of 7.8 billion yuan in the fourth quarter, an increase of 44% over the previous year.
Revenue for the full year of 2023 was 134.6 billion yuan, up 9% year on year, and non-GAAP net profit was 28.7 billion yuan, up 39% year over year. Good progress was made in reducing costs and increasing efficiency throughout 2023, and a high profit growth rate was achieved even when AI investment increased dramatically.
Ad revenue is growing steadily, and the mobile ecosystem is booming. In the fourth quarter of 2023, Baidu's core online advertising revenue was 19.2 billion yuan, an increase of 6% over the previous year, mainly benefiting from the recovery in demand for tourism, healthcare, and business services.
In December 2023, Baidu App's MAU reached 667 million, an increase of 3% over the previous year. Hosted pages accounted for 51% of Baidu's core online marketing revenue in the fourth quarter of 2023.
Intelligent clouds and intelligent driving are booming. In the fourth quarter of 2023, Baidu's core non-marketing revenue was 8.3 billion yuan, an increase of 9% over the previous year, and the smart cloud and intelligent driving business continued to develop. By the end of 2023, Baidu's propeller platform had gathered 10.7 million developers and served 235,000 enterprises and institutions. In terms of intelligent driving, Baidu's autonomous car service Radish Express provided 839,000 rides in 2023Q4, an increase of 49% over the previous year. As of January 2, 2024, the cumulative number of orders provided by Radish Express on open roads exceeded 5 million.
The commercialization of AI continues to advance, becoming a new driving force for growth. The Wenxin Big Model received more than 50 million daily calls in the fourth quarter of 2023, an increase of 190% over the quarter. In December 2023, 26,000 companies began using the Wenxin Big Model, with a quarter-on-quarter increase of 150%, including well-known companies such as Samsung, Honor, and Auto Home. At the public results conference call, the company stated that it will continue to invest in artificial intelligence, has a sufficient number of chips to further upgrade Wenxin's words, and is already investing in fields such as Wensheng Video. The generative artificial intelligence and basic model business is expected to bring more incremental revenue to Baidu in 2024.
Profit forecast and rating: The company's adjusted EPS for 2024-2026 is expected to be 10.76 yuan, 11.44 yuan, and 12.13 yuan respectively, and non-GAAP net profit will continue to grow over the next three years. Demand for advertising in various industries is growing, and the application of AI models continues to be implemented. As a leading provider of integrated Internet services, the company is actively building a new AI ecosystem. It is expected that the order volume will continue to grow in 2024, giving the company 10 times PE in 2024. HKD/CNY = 0.92 on March 8, 2024, corresponding to a target price of HK$116.96, maintaining a “buy” rating.
Risk warning: Risks such as AI technology falling short of expectations and ad market recovery falling short of expectations.