Baidu (BIDU) 22 Feb 232022 Q4 Earnings call transcript

Hello and thank you for standing by for Baidu's Fourth Quarter and 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. After managements prepared remarks, there will be a question-and-answer session. Today's conference is being recorded.

If you have any objections, you may disconnect at this time.

to conference, meeting of Juan like host to Investor now today's for Lin, would turn over the your Relations. I Baidu's Director

fiscal website call. and XXXX you distributed can everyone, welcome copy Baidu's as and quarter Hello, on on a our services. to earlier today, earnings well earnings Baidu's and conference find release as was fourth year newswire

AI Luo, EVP have Driving. call Li, our of Baidu Rong today, in-charge CEO; our Shen, we in-charge Robin Group, Zhenyu our the and Dou On and CFO; SVP ACG; Li, Cloud of Co-founder our Intelligent Baidu

After Litigation will will Please contain prepared Act Reform the safe a today note made statements Q&A of under the of XXXX. our session. remarks, we forward-looking harbor discussion Securities that Private the provisions hold US

are uncertainties expectations. current cause to that from differ statements to subject and may materially risks results actual our Forward-looking

and and Baidu required to annual detailed forward-looking as filed under with these our For of statements, update discussions applicable SEC updated Kong and uncertainties, to any other except obligation documents not refer undertake Hong please Stock report any risks law. the does Exchange.

earnings and press include call of unaudited Our non-GAAP measures. this certain financial discussions release

reconciliation unaudited unaudited IR measures of contains measures to ir.baidu.com. non-GAAP the at website Our release is available press most a GAAP comparable our directly the and on

a reminder: As This conference is recorded. being

be Baidu's IR on available website. webcast will In call a conference addition, this of

I will Robin. now turn CEO, over the our call to

by increase revenues core economy. impact impacted in the its Baidu a and a environment cases on XXXX, QX were In everyone. COVID-XX caused challenging Hello, by rapid broader

in operating margin the to managed our improve year-over-year we and However, quarter. profit

information time critical seeking as pandemic. value of moments accurate a like demonstrated and Baidu for that, peak Beyond users trusted COVID-XX the its during authoritative platform

and China for and queries, of on epidemic resources get better were and quickly As COVID-XX progress real-time their keen most people infected, updates indices forecasts to providing restrictions mobilized Baidu in local our the search monitor launched We based the people areas. were many transparency. in relaxed

In related Also and reputable queries And health of a about our QX, are threshold grew experts and offer on the high. public hospitals with reaching partnered medical new to in search industry. developments record-breaking guidance we today, year-over-year, we health. advice for exciting, XX%

I reviews will I'll our And themes. finally, business this major talk And outlook call, then on provide focus for three across For I'll about our quarterly XXXX. lines.

the Regarding themes. major

growth our First, fourth impacted quarter were our COVID-XX, although coming quarters. about by optimistic -- revenue first we in results our path to are the reaccelerate

from have Cloud, and in seen in the far healthcare, a verticals recovery online already travel, from QX, in business particular marketing So we of services revenue our lifestyle.

Assuming in consumption to no we take boost this increased and China. trend advantage of expect revenue significant our disruptions, online new through marketing recovery demand and continue pent-up

accelerating also new normal, and implementation operations We as to contracts return cloud cloud growth. signing revenue anticipate business resuming project AI

high are wave benefit. we to AI, the earlier riding us Second, as positioned of our well on investments make

that industry monetization. experience the significant growth Now is to about and

our of on Today, many expansion Over many and potential become doubled enterprise the value. have market its years, drive to services. has cornerstone products a down AI, and AI past recognizing we increase of

example, For and ranking improved enable instrumental search models of early results in search multi-modal been large capabilities. March models improved XXXX. the family have search These of in since delivering

offer AI energy manufacturing, industry-specific traditional and utilities. transportation, leverage cloud, In and we our to industries for as expertise such AI applications solutions

learning our of to another backbone Our intelligent algorithms other testament commitment vision driving business Baidu's built machine to this field. is computer and on the

well-developed extensive diverse and technology. revolutionize megatrend thanks with to that And language infrastructure, will Recently, leading businesses point using many have well-positioned array about on a capitalize models AI, imminent AI large pool, created talent ChatGPT, inflection users to Baidu a is our reading businesses. the generated of in

our latest language our Bot, We fully our launch powered models. by plan upcoming integrate Ernie the We new across of AI about in-house operations. Bot are Ernie all large of excited bot also to conversational

Baidu new believe and helping Bot attract products, the to Ernie embed point first. gain Search, next-generation and plan in We a profitable entry create users our this us we for generation market more will For a Internet, manner. consumer-facing into share and reshape presentation information

In the also will potential believe Xiaodu, Ernie and integrate Bot Xiaodu user allow generation future, into for we acquisition. provide to and devices services. content all the We notable on which significantly upgrade iQIYI will AIGC will smart also

customers, large technologies widely industries. XB entrepreneurs AI our language and applications across our and boost to business For their expect build platform to to public, we opening the more to plan our generated more model developers partners own and we ecosystem available businesses, this and productivity to cloud. on By make to help the owners models

For integrate user Bot Ernie our enhancing intelligent to auto plan solutions, driving, into experience. we further

prepared megatrend. We new can generative we we Clearly, from important pre-trained play an also expansion will of benefit in driving our new for business believe timely overall the transformers our operations. this AI inflection as role point, have the

third Turning to my theme.

We long-term will the sustainable our of focus company. to development continue on

you As know, an year. challenging was XXXX all incredibly

strong to adjustments by we reshuffles. management time optimization, lay have and the used building foundation through a organizational – However, cost more for a wisely efficient organization

believe result, a in will help achieve profit a to sustainable more improved and Baidu As Core's both second operating year-over-year. the non-GAAP XXXX, us streamlined of half margin growth. We operation

growth the impact the the operating cloud from quarter. improved review in decelerated Nevertheless, margins X% at recorded highlights. AI operate due were QX of Revenue the quarters COVID-XX cloud end Two of the major year-over-year year-over-year. prior factors QX. at growth to quarter fourth of in Now AI let's the play.

solution to at our for specific continued and solutions industries. applications low-margin back we AI continued standardize traditional use business cases in projects. we both First, to cloud for and second, And scale

quality been For adopted industries electric example, traditional energy. and by inspection have chemical renewable inspection solutions leading in and power strong companies many our fiber, like

and applications of seen AI as AI tackle working scale. our have challenges standardizing leader, applications, margin solutions enhancing replicate our challenges. industry-specific We industry and By with and improvement are industry-specific which solutions we cloud the we knowledge for

majority an mainly up supply China, make is coal-fired National we power province hour AI cooling for around of in power, of in solution to in thermal power to of fired, developed according Recently, trillion coal generating of X.X Statistics the XXXX, Bureau example, generation system. kilowatt improve the an automated efficiency As as leading a such which power plant Shanxi method through China.

According emissions internal similar per We XX.X-gram also to carbon our a expectation in estimates, coal aim hour, This our above consumption resulted kilowatt to kilowatt customer's reduction. this X-gram create a in means gain scale. projects hour. of reduction dioxide per solution to well more of X-gram almost

Driving. Intelligent to Turning

the largest provider autonomous reinforcing remained number and rides world, of in Apollo measured the ride-hailing to further model. by in Go completed. continued make our the our strategy service progress significant fourth quarter, We belief business the in

roads. In users' of to January, Go That's XXX% QX, autonomous the This increasing Apollo end public of ride-hailing Apollo on exceeded up the rides cumulative Go open year-over-year. By service. acceptance million. number demonstrates of the provided XXX,XXX X rides

are These the As improve accomplishments bolster build up operations, regulators' our our also market. both continuously we fully record scale users' refine the our able and and our driverless we to safety trust services. development of ride-hailing including technologies and and

driverless some December, services In driverless have begun were driverless roads. safety Yizhuang the critical in notable region capital we drive last we operation. we in fully step test car offer made of to the ride-hailing fully the late no public before in XXXX, in to fully on vehicles permission Beijing, allows city ride-hailing August, operations on with and In roads breakthroughs a granted operators public Wuhan Since Chongqing.

very this in reduce operators the cost In cost and cost. I from significantly driverless provided helping a fast, component expand stated fully reduce is operations. Removing As to cost vehicles past, to rides our per can public, mile. safety us labor increasing major in the ride-hailing operations QX,

a auto price breakthrough mass in to the It to for our EVs multinational This further on the with one China. popular market also with future. in In their of engagement RTX, of first automaker. China. Apollo's car cooperate we the unveiled cost costs intends models Baidu will range to initiative functionality a XXXX, reduce in us AVP bring time made us of solutions aiming allow for to robotaxis the

Moving into mobile ecosystem.

queries profit, the distributed App revenue in strong. Baidu X.X% feeds quarter. and mobile year-over-year MAUs the traffic App have high our to after recovery Baidu margins QX, Chinese in New year-over-year. through continued Despite the Both Our growth increased to Year declining a In we generate marketing December, ecosystem flow, and seen thanks efficiency. cash Encouragingly, experience to holiday. operating for remained substantial search operating mobile double-digit in revenues continued increased our total online

queries and accounting up to increasingly Baidu and merchandise another an note, not search come the for to and e-commerce but XX% more search revenue. over vertical, knowledge to and On growth, for search year-over-year of XX% total with services Baidu. growth in driving for Users come transactions retail information also on to only merchandise, remained advertising than us outperforming positive

videos online challenges. Apart year-over-year Quarterly monetization. Short ecosystem Search increase videos feed, mobile macro to within contributed revenue grown drive both search year-over-year revenue and And user GMV feed in by marketing Baidu facilitated of in Baidu in despite growing videos by the in short experience short XX% QX QX. prevalence also believe benefit we from growth. should long-term

producing content to creators AI, in continue short We enriching generate help videos. to content mobile ecosystem, our particular through

priorities forward move are focused. XXXX, we our clear into As and

we a we for First, a business revenue are have to recovery. as seen growth, committed pathway successful clear

and into We Second, AI advantage potential huge growth. business businesses. and of we generative the and integrate services large consumers poised most of available make models our our language cutting-edge to AI take products to of drive are to to aim both

healthy maintain our also growth will strengthening while foundation. we Third,

margins aim peers. expanding should Internet AI to continue mobile Our ecosystem generate for We margins flow. to outgrowing cash continue cloud our and and strong

make intelligent and market the We strategic also to to prudent in long-term will opportunity. capture continue investments driving

Rong financial the let that, call turn through me to results. go to over With

Thank you, Robin.

and results. decreasing details or was year-over-year. year generated billion financial flat Core in basically billion me solid RMB XXXX XX.X Core's RMB XXXX revenue, XX.X fourth with X% closed In of Baidu XXXX, the through full US$XX.X billion, our you year. last let Baidu walk financial quarter Now year results. total from We the revenue

Baidu demonstrating model fourth in a reached businesses quarter, and have in business marketing AI-powered mid to or Core so grow will do the continue to by and ago, cloud XX% online of our up from fast very other revenue Now and business fueled continued XX% long-term. year

of full in For the accounting from Baidu Core for revenues, XXXX, XX% online business XX% up year XXXX. our marketing

by in the were QX apple-to-apple revenue non-online comparison in to Xiaodu business. the an contributors X% year revenue Within in to increased marketing XXXX Core by X% challenging the another on year-over-year billion solid Baidu macro to both apples-to-apple online X.X down year-over-year by RMB QX revenue comparison. Xiaodu to decreased the and Baidu revenue COVID. XX.X QX and RMB year and from caused in by the billion achieve Baidu environment X% Core in XX% marketing advertisers marketing on X% XXXX. in up due year-over-year XXXX. from sequentially is non-online year-over-year the demand AI growth marketing to business, revenue weak an online Cloud was continued by

billion QX, Cost XX iQIYI the decreasing RMB RMB revenue in RMB iQIYI X% the cost other revenue primarily in AI was reduction business, content offset revenue was increasing to to X.X X% year traffic year-over-year. related was X% costs. decreasing QX, due year-over-year. billion the billion XXXX, XX.X costs, in in new in sold costs increase goods and by year-over-year of acquisition partially of

marketing revenue RMB an by RMB costs cost year-over-year decrease acquisition XX.X of XX%, expenses. Operating to a and reduction a the costs, business, in decreasing AI to RMB to in sold traffic decreasing which Operating reduction XXXX, increase primarily in were primarily billion primarily a in expenses due content billion of were expenses Cost by to billion decrease expenses. year-over-year, other X% of XX.X and year-over-year, channel costs. is offset in costs, was which in goods XX.X new due X-X, staff-related due related was promotional personnel-related QX, bandwidth XXXX, spending, XX% in

operating income Non-GAAP in XX%, RMB operating non-GAAP margin QX X.X in X-X, was Non-GAAP XX%. operating RMB income XXXX, billion XX.X billion margin was XXXX. in was non-GAAP and and operating was

XX% in was XX% QX. non-GAAP Core, billion operating Baidu non-GAAP billion Core RMB in Non-GAAP and operating and operating the was income margin year margin was XXXX. operating For Baidu XX.X income RMB was X.X

billion RMB non-operating the RMB X.X was income mainly billion, billion. X.X RMB loss X loss was from In billion X.X other resulting was in Regarding fair X.X total net gain loss value of long-term from X.X RMB billion, impairment investments. expenses from items, total investments. an from fair billion long-term resulting value RMB net Income XXXX, of QX, of a RMB other and tax mainly

net Core margin was expenses QX, X.X Non-GAAP to was tax per earnings diluted X.X billion, and RMB RMB income was net ADS XX%, Non-GAAP income Baidu Baidu Income billion. diluted earnings ADS X-X. X.X XX.XX. Net income XX.XX. for billion, was Baidu attributable was to RMB RMB billion. and to per was was RMB In RMB Baidu attributable X Core attributable net

Non-GAAP RMBX.X margin net RMB Baidu attributable was was net non-GAAP Core earnings attributable billion, for Core Baidu attributable amounting net XXXX, income X.X per to Non-GAAP Baidu income margin net X%. Baidu was and Core Core Baidu to RMBXX.X diluted X-X. billion, was to ADS attributable RMB to RMBXX.XX. non-GAAP and XX%. non-GAAP attributable Core for was Non-GAAP Core billion to In billion. X.X Baidu income Baidu net was and earnings per net RMBXX.XX. year And for margin RMBXX.X income billion, net for XX%, Baidu Net was ADS and income was diluted was

or billion RMBXXX.X Core billion, short-term or billion. Cash December billion Core cash in excluding for XXXX, for iQIYI Baidu US$XX.X Free were of RMBXX.X and Baidu investments US$X.X XXXX. was flow as XX,

as On continuous cash efficiency. a approximately note, are XXXX. again iQIYI's had efforts Core operating once profit flow. XX, we Baidu iQIYI December quarter, operating XX,XXX about generated to In improve the of and positive free separate non-GAAP excited employees

user to of XXX.X of to the million net terms its Enlighten share in increased previous million effective the according a category iQIYI total drama in XX.X market reels, Data. addition side, maintained subscribing from video quarter. iQIYI's daily largest On the number for members average of QX,

results. XX addition, power Post raisings, In iQIYI's past continue voting iQIYI these the controlling around in iQIYI hold US$X.X to and billion. consolidated Baidu financial in fund months, raised

questions. Operator, call with to open the please. that, Operator, let's now

will we session. Alex question ask question-and-answer Please your gentlemen, from comes question. Instructions] the Ladies [Operator begin JPMorgan. and first now Your Sure. Yao

health advertising interested Thank February, Chinese couple they From relatively recovering on Year comment the holidays? what industry? revenue you us perspective, franchising Year share And exposure are quarter. local you in your off-line Can question. Congrats my on what weaker-recovery And the online particularly, care. business. And are travel, have are are the with services, verticals? management post industry? of verticals holiday? and you I you the stronger-recovery as taking off-line I'm how in New industry since such the for a the these seeing Chinese strong a for trends a questions New to Can the

quarter the bit on you. can comping you consumption advertising us be will months, coming you year-over-year secondly, because think has the a should we are growth next with your of already the then couple thoughts And share been months? the normalized. And advertising trend preliminary little against basis. in recovery in on trend Particularly, special, particularly I How a about think low-base of second Thank second quarter?

is Hi Alex, this Robin.

Our ad with business is highly Core. correlated

operations when had its the of as first And People's the companies it's on gradually quarter, COVID and are trend. are daily now a lives number you entered passed As know, back-to-normal many peak. infections the of we well. downward recovering

largest cost. seen in travel, lifestyle When including our verticals, our As franchises. we the improvements economy from the verticals, into care, our ad recover, have and to is continues improving we ad substantial gradually revenue look health

-- online I in passed recovery weaker. relatively COVID online its businesses. games to the think And number by These regarding all infection And pretty of region, much especially, the has businesses, all are China. offline peak, is

Tier breaks peak The lot started took longer cities earlier. And post-Chinese than from the work. a New before regions of X and That's to Year passing families cities. to X X Tier X back for -- the because Tier holiday, people recovered going earlier, Tier faster recover their cities

the And of recovery heavily of our correlates top again, verticals. magnitude the the with recovery

we're ad China's beyond from recovery. part and As quarter the will business confident first of we latter our macro reopening into that look XXXX, the and benefit

to spend rather we should business provide recovery our pure which of highlight forward the to revenue. process during want promotions that, from ad ads, prefer advertisers, also performance-based and look to And advertisers that boost on I to recovery. demand significant with brand economic than

And intentions connect offerings. be the Search search gain our have expect effective ads to clear advertising, advertisers. to search. why because users' most proven product the service of performance-based That's has intent relevant using dollars marketing form the from and we users when more a with most

benefit we will Overall, growth GDP in believe growth China's our our China's drive from the will outgrow we e-commerce short revenue long ad should run. to economy the macro improvement. of sustained long-term of business. Also, videos the long-term, continue to and continue Over ad

engagement opportunities growth. believe, revenue we excited users drive App should interest drive Bot We AI. features Search, power are Beyond new an powered attract advertiser user long-term that, our by us also The we very experience. about Ernie help generative in new this around Thank and user too, Bot, will Baidu the particularly by have Baidu incorporating and Ernie enhanced Baidu so you. and will to

please. Operator, question, next

Thank you.

comes your question Yap Alicia question. next ask from Please from Your Citigroup.

Yes, ChatGPT. Hi. team. Rong Robin, Luo related Thanks questions question. and thank evening, to you. my is for My management Good taking

on positioned and So share content. a you appreciated. be with trend? would AI-generated field? that Baidu seeing there's in new And this lot Baidu is been us progress ChatGPT in of that how share in expectation also the color Any the this what be can opportunities are Can could management management

for your Alicia. you Thank questions,

excited AIGC. megatrend of obviously ChatGPT It a and lot about could represents things. are We a change that

our AI working Ernie technology language latest are models. in on that version uses new of a conversational We large Bot, bot

Bot and first; public the we'll March. to Baidu We Search, into open it in embed will Ernie

billions so model. Remember, it XXX state-of-the-art And about requests up Baidu we is is have not is language Chinese about but in language, of and the every terms Ernie only understanding also it day, capabilities, applications MLP Chinese other considered launched of culture. as trained with search user China's the is and leader parameters. It in serving March over Ernie well XXXX billion innovation. technology in scaled by

will Chinese to very suitable market, working we means overseas. be foundation now Ernie in more language which for language and on are generative the the developed large X.X model China is market AI models than already China model right localized a

We to you of In works. use from layer. pre-training, model full-stack their AI strong or framework AI is addition, in Ernie significantly. our productivity support to AI language gained is strong framework synergy of generation very allow has Paddle know, based, large efficient that our believe all model vertical deep layer learning and is the -- Millions This areas most expensive. there and search is capabilities applications, and which momentum. for a improve on as PaddlePaddle, between kinds developers will the the us could content build --

on creation. For on And traditional the Baidu version upon soon mentioned with will the just would be generative Bot we be model. hard that attract as Search interactive a we're revolutionary content of Baidu and to I more -- search are working too. as we Search, incorporates built search algorithm are new that language users. well into Ernie our directly or working able adding generative even large experience features interact upgrading Users It complementary AI

strong a become ChatGPT traffic of users creators also could expand and potentially merchants, help Meanwhile, types new advertisers, market of et size one our point our content it. With AI the upgrading our entry Internet features able should There and example. search. from for to will therefore, it the we applications, believe, model. be just keep many Search and will is also capabilities, cetera. benefit iterating other we are --

AI for Cloud. And

deep open-source the full-stack framework cloud layers AI and layer offerings of to ultimately Our foundation application. provides from layer the model Cloud large learning layer, and to infrastructure four to

the are four these So layers.

to and in and about owners large language should as including improvement positive build model and service, model our a better opening increased of entrepreneurs applications experiences. the improved areas, business own on a.k.a. the models number decision-making bring change their and cloud; efficiency, help customer a many generative significant by public, And we

and capabilities AI strong large language to models. moat Baidu's in our AI So build foundation models recap,

we industries able the In own for applications search, develop addition many size many, models, expand are productivity. to to their build improve their own significantly and to help market their

in be to will a industries are it what's and way AI cloud a about super come. computing. changer believe for We game transforming is big excited we many

ecosystem are around an Ernie Bot. building AI We

Bot journey. today, beginning just a integrate of Ernie products this of their decided into the Thank As And remember, have you. services. of already number the to and organizations is

you, Thank Robin.

you. Thank

Morgan Your comes Stanley. ask question Please next with your question. Gary from Yu

you Congratulations set and a Hi. on results. management of Thank decent

a have business. cloud I AI questions of So regarding couple the

service far? seen First for we are in revenue one is, in disruption of XXXX. in product that be? for market projects for fourth collection that to the have growth the see out what quarter? management in product growth how the as push coming major the we saw the What revenue quarter rate the expects cloud -- you do offering And to cloud first the XXXX And Will cloud, benefit what offering overall see? of we and can off reopening years revenue kicked company kind from growth growth. cloud the expect And so the the driver

of a sector. And sector also this on sector think you time is IT win overall I And year? so that, the reaching on -- second the do comment versus in that weak? given remains a by budget you. question, number comment bottleneck, spending line? you gradual far, And public And the macro the so think overall the cloud is the And any enterprises breakeven? to versus to related breakeven can public key what private will the decent expect lastly, do Thank also projects you just new be uptick

This Dou. first care questions one. is two and of for the Hi, Gary, questions. the take I answer will let your thanks last Rong then

gradual have cloud recovery the do to reopening. of team work R&D post So has we as on revenues begun seen our projects a ongoing

revenue for the recognition However, -- varies few from few lead to from a sales cycle to months a quarters.

[ph] on our continue revenue impact to we should in year, going revenue peers the but on that, have this initiative focus ad ACE improvement our low-margin both aim projects margin for our outgrowing forward, This AI will cloud XXXX. solution considering Internet keep for still businesses cloud. growth an in as meanwhile, growth out Now we will we but and cloud backloaded be

near the I use will for efficiency for we GDP If sure, transformation cloud transformation believe most And AI from for improve and term, big trend traditional to we the positioned. think key long digital look this because the into the industries growth and onto the will be benefit in unchanged. is to remains the we their Baidu the the business intelligent uniquely future. driver move

Actually, learning our and from models; mentioned, to platform, PaddlePaddle, cloud layers, full-stack as foundation know; offerings others, Robin that's to our cloud large new to to applications. four infrastructure, just compared as provides -- AI on deep you four And even which and layers in models. seamlessly providers solutions all for versus solutions can work cloud different costs, the offered the optimal together each end-to-end achieve built platform our, at is from for lower outcomes to other

In addition, end-to-end shorter once will solutions have of which layers, benefited can plans. much actually upgrade we these further in the any on time improvement

technical by the And know in know So the manufacturing, because, transportation, one if successfully or most a you service the we be cloud delivering believe advantage points. I other energy industries we were already of experience in industry we to the pain efficient in accumulated already sectors should explained, and the I utilities Baidu's high-quality products and have solid just addition industries. the so

products, this integrate mentioned, business importantly, Bot Robin to help operations. just and their owners their new entrepreneurs many so plan and or improve Most AI innovative build explore applications, we into as should Ernie cloud our business

significant So whole China's we potentially cloud our reshape cloud industry. believe step this will for the be a and AI

part. productivities help vital play era owners And AI from AI business to a your with last will turn all Rong and for in leap role I will to will So industries. era, that, entrepreneurs more we where digital in to technologies

AI strategy address by businesses which margins AI to low-margin cloud regarding our can to applications We your a for cloud cutting the going I'm for which years. Yes, and improve margins. continue consistent is to up, scale continually question to Dou. Thanks, building

cloud I two think, parts. mentioned we as including have is AI actually before our

margin, to one a operating which enterprise margin is both the cloud is margins perspective. gross and making, generate the loss the first be improving operating still profit personal The the cloud continue will decent margin while in while

prepared to takes if will new signed, in lot sizable of confident on mid industries, improvement which AI margin to fact, are how we in margins Difficulty]. Robin the stack And has this a you pretty at and healthy continue margins capability build by the quarters. coming achieve we I'm help And application talked make his a can help future. projects the be but the past our that [Technical business projected can us Baidu's the profitable few much Note portfolio In AI used continue about to improving in we years. it to we've can remarks. look companies improving lastly, time cloud us a full AI in track in that

Thank you.

Thank you.

Your with next of Please ask your question America. question. Eddie comes from Leung Bank

[indiscernible].

have investment questions I So quick a around couple margins. your and of

color As economic acquisitions as plan think for to a on AI to your margin operate, recovery, that? could expensive Robin you investment give could right? you So some well the mentioned that, And the targets? about little the bit be talk your an head also related we of profile of business, R&D long-term Thank also profile are such that, having and can to I user chatbot pretty XXXX, could And you a and count? talk just related core that you. as us expense bit as about marketing margin the G&A then

me to still try restructured which our reviewed end carefully the address actually industry the in was remember, we business And your to let and expenses and start our thanks much last quarters. we your If in And questions. the cut Yes, for ahead and we've questions, of Eddie. since year so China. of same XXXX, costs counterparts few

profitable long or down advantages where even be we have For and mobile we've phased out obviously cannot Baidu for ecosystem, competitor some term. -- has we no sized businesses

to Baidu And MEG same healthy AI the also -- than are count focusing head much by first the in so, controls for the or time, before. we leaner during past areas costs. -- We're in -- in more cloud, robot not X%. gradually are we the Core growth are eliminate start where businesses. having best doing years, of And operations the class. we our and we are mobile mobile at class low-margin on than today, we ecosystem By is actually the reduced tightening over total ago And one year

a down XX%, as year-over-year. R&D result, expenses And year-over-year. decreased was And that, out, down You separate Core's in probably XXXX, X% if them by SG&A one-five, we operating by X% by year-over-year. see can Baidu was

profit year organization year increasing In a second Core's ago. operating half non-GAAP now XXXX, is we the than margin structure, healthier Baidu of the have cost one year-over-year. a And stronger

So remain and XXXX, to as the will sustainable organization. development in very we the are continue year looking spending. we for long-term the balance forward whole will we growth building to a And revenue disciplined margin

ROI carefully costs. line we we will If monitor manage other for into continue And to will we Baidu's promotional acquisition costs. all items variable particularly each look the all activities,

R&D, now, the or team. hard more be For building to our to efficiency We the leverage values R&D are R&D over can long asked services able design. users to create should very you just from focus operating required customers. we the team term, have for see believe, on which technologies, working and we are products The today the of improve

same the and we the to At time, new growth opportunities monitor invest and for continue will closely returns.

For will for businesses we keep believe, because technologies investing cutting-edge transform opportunities it or large models and we CapEx, Baidu. provide will like AI, generative many language in huge

invest we such resources able reallocate of will we to are to While business. our initiatives not efficiencies Bot. to new in some further new, the Ernie supporting hesitate promising In as short, improve the our

each profits our And to AI continue a business. as future, into we low-margin just cloud, key cut Robin in continue and is applications. on which cloud, should continue cash look we will aim and and AI to summary: high the for as our And generate enterprise to ecosystems solutions our industry. standardize expand cloud, foundation. So businesses say, focus We for Within has on down margins. Mobile to continue flow AI we will Dou will to and

cloud, personal we margins decent continue and For in earn the will future. profits to

meanwhile, to monitor Apollo operational returns. metrics but future, Go, and for financial we investment evaluate invest continue will we For the to performance carefully will its and our

will Over the the believe optimize process, you and so expenses, room to cost margins questions, still we during Thank long flow. with growth for run, allocate and we Eddie. much have we dynamically your our and balance resources cash this but

Thank you.

Wei Xiong your Please UBS. comes question from next with question. Your ask

line we should share And breakeven map, want any road economics I as taking your if also current think for ask business. And to management color how and on Good for for I'm thank that unit the be Hi. well? What technology the a is your management. the would robotaxi? Congratulations quarter evening, this about about question. you on strong business? time can robotaxi my wondering. appreciated

Thanks questions. Zhen. is for This your

For you the for economics, cost and regarding costs. labor are as questions major cost unit know, vehicle the robotaxi

cost. labor firstly, So

fully As open service fully operation XXXX, to the lower means helps officers progress In know, big on providing which made car, driverless labor costs. driverless in the no safety roads. in we you

hailing and ride Wuhan driverless Now we providing are Chongqing. service in fully

in daily and expanding example, covering longer we fleet operations area For by kept by wide a -- our operations vehicles. of Wuhan, and growing also operating hours

fully were fully towards open in the in step This on further In and driverless driverless we plan to fully the operation driverless drive December, cars test capital drive fleet city. roads operations. allowed we In for to important is Beijing. expand XXXX, our

cities more autonomous safety more We in More will operator. by are operation. ride China to continue remove in-car to reduce costs and to hailing labor supportive vehicles allowing

market from Baidu change. is this a As leader, benefiting

and performance. core safety Also, helped improve to as our we us our operation scaling further technology before, refine said up

As up, rides autonomous provided and as regulators. hailing remained ride Last gaining year, the scale globally. than we the million Apollo core we from our service we largest provider further in more Go to will X.X improve technology public. trust

top in number green cities more We continuously a and a rides XX cities improving provides each lights like already more service is This vehicle more in average, than hailing driverless day. taxi can fully the our on by will our what give future. Beijing to do. believe, close to Now, ride technology,

Apollo to offer cost vehicle driverless reducing services. fully which ride-hailing RTX, designed large-scale is Secondly, with

price are time. electric the We for vehicles of the the mass-market first of to robotaxi range cost bringing

EV continue cost believe to the decline lot parts still is costs of decrease. as fast of and market in We future, supply China's will entire to vehicle a The localized. chain has is highly very room the developing auto

Combining of that Go those factors, improve. believe two unique we economics continue to Apollo the will

model language once And improve up, said, technology. large will help can further leverage improve safety to to this performance. us we you. Thank Robin As scale we

you. Thank

Thank you.

Fong Please ask Kenneth with comes question your next Credit Your question. from Suisse.

especially taking you reopened, seen cities? spent. impact the Hi. any set on question a and parameters traffic I China time in Thank two or my strong Have very big you. and changes results. management you for questions, in user as user these on have of the congrats Thank

more the Robin. think, apps, outdoors actually X.X% as time post I that major but whole, People to for year-over-year, time Kenneth, spend increased started outperformed reopening, market. this user our Hi spent And is January. a in overall the mobile

variety needs a users. of cater that wide to have We various of apps

a few apps in help relevant online proposition. the and find unique technology. very Baidu Search authoritative We value has people most information Baidu App China, one is the quickly and through super of

they information users and search whenever to Baidu. for knowledge, So to want come

When to for be to Baidu can Even better Search Baidu Apps. check entrance they more work, this and apparent. their the other if by better becomes of or scores, matched exam back regions epidemic come they this very kind development needs want and in check

and for Over other provide use in the Baidu's not services. with our we and efforts come to in position products Internet search strengthened experiences to space. technology so in we leading content and past but us products. users only many to better These find people mobile information in continued can years, feed China's enrich have to also services to search, Today,

AI new highlight you. course, be potential benefit to before. the It video more believe our typical another revenue. and will a time, AI. Bot, direct Also, AIGC has video of and viewership on online. for entry for become content Generative over Ernie is, application traffic generate people mentioned a ad I help using point is to the videos short as us Thank short We will platform accumulate And increasing

you, management. Thank

Sachs. your Please Kong ask from Lincoln next question. Goldman Your comes Operator: with question

for Thank Bot. in a our opportunity. the of Ernie follow-up have terms I ChatGPT you, management and

-- company recently or Baidu's partnering So Ernie are it technology. that the keep with announcing -- seems us Bot they're domestic use many

of revenue more on here? challenges the service do similar how potential? can coming or monetization management companies terms think offering So And or we bit partnership? a about Thank a elaborate So competition: opportunity opportunity should here? think And big Internet should -- be format how other this could about we what also And of you. this in and limit the monetization our

Bot, glad to many strong Ernie out work to Ernie announced see interest Bot. and organizations We're the after with us launch reached that, Sure. to their plan we expressed to

their partner More products they Some language or enterprises integrate already more industries, services to large realize generative would announced opportunity. their Bot and capture into and like this models their us that change or with to to are operations. plan Ernie capabilities going to

The needs, attracted the has and for recognized Bot monetization that AI AI fact capabilities also Ernie of come. is finally has to of integrated opportunities, regarding Baidu age And search. users well our enhance so much more be be shows interest leading Bot Ernie will Baidu us of will size and for all the into kinds to much therefore the And Search user significantly expand market tasks experience. dependent on

the this will much based things. to efficient, We this great share to are bandwidth help model the AI not or they basic run. user images videos; our their opportunity AI stuff, ad for It cloud for attract Ernie. user users, able and kind new time our or will can more expand create over using us storage or our foundation will our too. leverage They to the and capabilities, like text, easier, much so online gain propel the revenue in be apps content more AIGC increase and us on much cloud customers, a PaddlePaddle develop be framework just this stickiness; will spend full-stack And long powerful, market of database,

is models It language cloud applications. And quite PaddlePaddle full widely and our infrastructure, platform of stack contains and like large unique. deep used learning AI capabilities

in strong four layers, have presence layers We work these four and a together all efficiently.

been time. user kind requires of model and adapt is this language popular have to Bot Baidu entry large of first-mover using trained be of help of significant over Baidu's other multiple to Ernie daily and we for pool X.X family apps. requests has with search well-tagged high. It advantage. Ernie will very years and Our this billions quickly barrier investment, The data improve hugely the

Ernie The feedback. behind Learning technology human is with Bot called, Reinforcement

So part here, is human critical. feedback the

more-and-more our human mover, first the we of else. further improve As capabilities way ahead anyone get and feedback

focused we will value, Ernie believe, continuous after right you. preparing we we are are launch. Ernie the tuned. And Bot the make improvement launch focusing now create and Bot stay of that immediate also areas on on so And Thank

Thank you.

does gentlemen, you conference Thank Thank that today. you. conclude our participating. Ladies and for for

You all may disconnect.