BEIJING, Feb. 13, 2018 /PRNewswire/ -- Baidu, Inc.
(NASDAQ: BIDU) ("Baidu" or the "Company"), the leading Chinese
language Internet search provider, today announced its unaudited
financial results for the fourth quarter and fiscal year ended
December 31, 2017[1].
"In 2017, Baidu sharpened its strategic focus. We strengthened
our management team and built strong momentum by adopting AI-first
in our mobile businesses and investing in new AI businesses," said
Robin Li, Chairman and CEO of Baidu.
"As we enter 2018, we will continue to strengthen Baidu's search
business, fuel feed's growth and differentiate iQIYI with AI. We
also look forward to further strengthening our position in
autonomous driving and conversational AI, on top of the strong
progress that we have made with Apollo and DuerOS in 2017."
"We are deepening user engagement with Baidu core products and
helping Baidu customers optimize their ad spend on our platform
through the use of AI," said Qi Lu, COO of Baidu. "On Baidu's
AI-enabled businesses, we are focused on expanding our partner and
developer programs for our open platforms Apollo and DuerOS, which
we successfully showcased at Baidu World and CES events."
"We delivered solid financial performance in the fourth quarter
with revenues up 29% year over year to RMB
23.6 billion, exceeding our guidance," said Herman Yu, CFO of Baidu. "Entering 2018, we plan
to continue our strategy to exit non-core businesses and increase
investments in Baidu's mobile and new AI businesses, which we
believe play to Baidu's strengths as a technology leader and will
sow the seed for Baidu's future growth in autonomous driving and
conversational AI, particularly in the home environment."
Fourth Quarter 2017 Financial Highlights
- Total revenues were RMB 23.6
billion ($3.62 billion),
increasing 29% year over year. Mobile revenue represented 76% of
total revenues, compared to 65% for the fourth quarter of
2016.
- Operating profit was RMB 4.8
billion ($734 million),
increasing 118% year over year. Operating margin reached 20%,
compared to 12% for the fourth quarter of 2016.
- Non-GAAP operating profit was RMB 5.8
billion ($884 million),
increasing 104% year over year. Non-GAAP operating margin reached
24%, compared to 15% for the fourth quarter of 2016. iQIYI reduced
non-GAAP operating margin by 12 percentage points for the fourth
quarter of 2017.
- Net income attributable to Baidu was RMB
4.2 billion ($639 million) and
diluted earnings attributable to Baidu per ADS was RMB 12 ($1.90).
Non-GAAP net income attributable to Baidu[2] was RMB 5.2 billion ($804
million) and non-GAAP diluted earnings per ADS[3] was
RMB 15 ($2.29).
- Adjusted EBITDA was RMB 6.9
billion ($1.05 billion),
increasing 78% year over year, or 29% of total revenues.
Fiscal Year 2017 Financial Highlights
- Total revenues were RMB 84.8
billion ($13.03 billion),
increasing 20% from 2016. Mobile revenue represented 73% of total
revenues, compared to 63% in 2016.
- Operating profit was RMB 15.7
billion ($2.41 billion),
increasing 56% from 2016. Operating margin reached 19%, compared to
14% in 2016.
- Non-GAAP operating profit was RMB 18.9
billion ($2.91 billion),
increasing 60% from 2016. Non-GAAP operating margin reached 22%,
compared to 17% in 2016. iQIYI reduced non-GAAP operating margins
by 11 percentage points in 2017.
- Net income attributable to Baidu was RMB
18.3 billion ($2.81 billion)
and diluted earnings attributable to Baidu per ADS was RMB 52 ($8.06).
Non-GAAP net income attributable to Baidu was RMB 22.3 billion ($3.42
billion) and non-GAAP diluted earnings per ADS was
RMB 64 ($9.79).
- Adjusted EBITDA was RMB 23.3
billion ($3.59 billion),
increasing 48% from 2016, or 28% of total revenues.
Other Highlights
- Baidu's annual conference Baidu World was held in
Beijing in November 2017. This year's theme was "Bring AI to
Life," which highlighted Baidu's efforts to bring AI to everyday
life by enabling products and services to adopt Baidu's AI to
better understand and serve consumers. At the event, Baidu launched
DuerOS 2.0.
- Baidu showcased Apollo and DuerOS at the Consumer Electronics
Show (CES) in Las Vegas in
January 2018 and announced Apollo
2.0.
- Baidu and the government of Xiong
An in China's Hebei
province signed a strategic collaboration agreement to develop the
new economic zone into a smart city powered by smart transport,
voice assistance and cloud computing.
- Baidu launched Bear Paw account to improve the search
experience and enable businesses and brands to engage with Baidu
users.
- Baidu and Huawei formed a comprehensive strategic cooperation
that spans from AI platforms and technology to internet services
and content ecosystem.
- Baidu and China CITIC Bank announced the opening of a joint
venture, Baixin Bank, which offers
online and telephone banking services and a range of innovative
services that leverage Baidu's AI technology and big data.
- Baidu opened a second R&D facility in Silicon Valley and a
new engineering office in Seattle,
WA, which will focus on autonomous driving, Internet
security and other development work.
- Baidu launched Baidu Wifi Translator, a portable translation
and hotspot device that audio translate several languages using
advanced deep learning, voice recognition and other AI
technologies. In partnership with Ctrip, Baidu's portable
translation and hotspot device is available in various airports
throughout China.
Apollo
- Baidu released Apollo 2.0, which supports simple urban road
conditions and introduced four new functions, including cloud
services, software platforms, reference hardware platforms and
reference vehicle platforms. Apollo supports four main computing
platforms, including NVIDIA, Intel, NXP and Renesas. Baidu
announced that the Apollo platform has 165,000 lines of code and is
adding approximately 65,000 lines of code each quarter.
- Apollo has garnered more than 90 partners, including some of
the world's leading forces in autonomous driving.
- China's Ministry of Science and Technology announced that Baidu
Apollo has been designated as the national autonomous driving open
platform.
- Baidu formed a strategic partnership with Xiamen King Long United Automotive
(King Long). King Long plans to produce Level 4 buses using
Apollo by July 2018.
- Baidu formed a strategic partnership with BAIC Group. BAIC
Group plans to mass-produce vehicles with Level 3 autonomous
features around 2019 and fully autonomous Level 4 cars around 2021
using Apollo.
- Baidu partnered with automobile manufacturer Chery to provide
functions such as smart voice interaction, smart online navigation,
facial identification and interconnected entertainment to Chery's
high-end product EXEED TX. Chery plans to mass-produce Level 3
autonomous vehicles in 2020.
- Baidu formed a strategic partnership with Anhui Jianghuai
Automobile Group Corporation (JAC) for the mass production of
self-driving cars. JAC plans to begin producing cars using Apollo
in the second half of 2019.
- Baidu formed a strategic partnership with Chinese car-hailing
company Shouqi Limousine & Chauffeur to fast-track the
development of smart transport through Apollo and DuerOS
platforms.
- Baidu and NXP Semiconductors have announced a strategic
cooperation in autonomous driving. NXP will join Apollo and provide
semiconductor products and solutions including millimeter wave
radar, V2X, security, smart connectivity and in-vehicle experience
technologies.
- Baidu, NVIDIA and ZF are creating a production-ready AI
autonomous vehicle platform designed for China. This collaboration
is based on Baidu's Apollo Pilot, an
autonomous driving product targeted for mass production, the new
NVIDIA DRIVE Xavier™ and ZF's new ProAI car computer.
- Baidu and Udacity announced the launch of Apollo's autonomous
driving online courses, which are designed to expand the base of
Apollo developers.
- Baidu launched the Apollo Global Institute to help close the
global AI talent gap, leveraging Baidu's technology centers in
Beijing, Shanghai, Shenzhen, Silicon Valley and Seattle.
- Baidu plans to form a RMB 10
billion ($1.5 billion) Apollo
Fund to invest in autonomous driving and expand Apollo's
ecosystem.
DuerOS
- Baidu released DuerOS major upgrade version 2.0 with enriched
solutions, Bot platform for developers and an improved voice
interaction experience. DuerOS has more than 130 partners building
over 50 DuerOS-powered hardware products, including televisions,
smart speakers, smartphones, smart headsets and more. DuerOS
Intelligent Device Platform launched more turn-key solutions to
cover various form factors, including televisions, smart speakers,
smartphones, smart headsets and smart robots. DuerOS Bot Platform
has garnered over 7,000 skill developers and released over 100
skills.
- Baidu formed a strategic partnership with Qualcomm to optimize
Baidu's voice assistant DuerOS for smartphones on the Qualcomm®
Snapdragon™ Mobile Platform, including the upcoming Snapdragon 845
Mobile Platform.
- Baidu formed a strategic partnership with NVIDIA to enable
NVIDIA SHIELD launched in China to
be equipped with Baidu's voice assistant DuerOS, offering Chinese
consumers a cutting-edge gaming, AI and home entertainment
experience.
- Baidu launched raven H, a smart speaker, as its first
1st party AI hardware. Three new DuerOS-powered smart
devices were showcased at CES, including Little Fish VSI smart
video speaker, Sengled smart lamp speaker and popIn Aladdin, a
smart projector lamp for the Japanese market.
In the following section, comparison and analysis are provided
based on reported consolidated financial results.
Fourth Quarter 2017 Results
Total revenues reached RMB 23.6
billion ($3.62 billion),
representing a 29% increase year over year. Online marketing revenues were
RMB 20.4 billion ($3.14 billion), representing a 26% increase year
over year. Baidu had approximately 460,000 active online marketing
customers[4], representing a 2% increase year over year. Revenue
per online marketing customer was approximately RMB 44,300 ($6,800), a 25% increase year over year.
Traffic acquisition cost as a component of cost of
revenues was RMB 2.5 billion
($387 million), representing 10.7% of
total revenues, compared to 14.5% in the fourth quarter of
2016.
Bandwidth costs as a component of cost of revenues were
RMB 1.4 billion ($215 million), representing 5.9% of total
revenues, compared to 6.8% in the fourth quarter of 2016.
Depreciation costs as a component of cost of revenues
were RMB 885 million ($136 million), representing 3.8% of total
revenues, compared to 4.5% in the fourth quarter of 2016.
Operational costs as a component of cost of revenues were
RMB 1.1 billion ($174 million), representing 4.8% of total
revenues, compared to 6.5% in the fourth quarter of 2016.
Content costs as a component of cost of revenues were
RMB 3.8 billion ($577 million), representing 15.9% of total
revenues, compared to 14.1% in the fourth quarter of 2016. The
year-over-year increase was mainly due to iQIYI's increased content
costs.
Selling, general and administrative expenses were
RMB 3.6 billion ($558 million), representing an increase of 9%
year over year.
Research and development expenses were RMB 3.7 billion ($569
million), a 25% increase year over year. The increase was
primarily due to the growth of research and development
personnel-related cost.
Share-based compensation expenses, which were allocated
to related operating costs and expense line items, were
RMB 977 million ($150 million), compared to RMB 632 million in the fourth quarter of
2016.
Operating profit was RMB 4.8
billion ($734 million),
representing a 118% increase year over year. Non-GAAP operating
profit was RMB 5.8 billion
($884 million), representing a 104%
increase year over year.
Other loss, net was RMB 294
million ($45 million). Other
income, net was RMB 1.8 billion in
the fourth quarter of 2016, which mainly consisted of the
investment gain recognized as a result of Baidu's exchange of
Uber China shares with Didi.
Income tax expense was RMB 929
million ($143 million),
compared to income tax expense of RMB 401
million in the fourth quarter of 2016. Effective tax rate
was 18%, compared to 9% for the fourth quarter of 2016. The
increase in the effective tax rate was mainly due to tax refund
received in Q4 2016, as a result of newly granted preferential tax
licenses for certain PRC subsidiaries.
Net income attributable to Baidu was RMB 4.2 billion ($639
million), representing a 1% increase year over year. Diluted
earnings per ADS amounted to RMB 12
($1.90). Non-GAAP net income
attributable to Baidu was RMB 5.2
billion ($804 million), a 14%
increase year over year. Non-GAAP diluted earnings per ADS amounted
to RMB 15 ($2.29).
As of December 31, 2017, the
Company had cash, cash equivalents and short-term
investments of RMB 100.5 billion
($15.44 billion). Net operating
cash inflow was RMB 10.0 billion
($1.53 billion) and capital
expenditures were RMB 1.2 billion
($183 million).
Fiscal Year 2017 Results
Total revenues reached RMB 84.8
billion ($13.03 billion),
representing a 20% increase from 2016.
Online marketing revenues were RMB
73.1 billion ($11.24 billion),
representing a 13% increase from 2016. Baidu had approximately
775,000 active online marketing customers, representing a 21%
decrease from 2016. Revenue per online marketing customer was
approximately RMB 93,500 ($14,371), a 43% increase from 2016.
Traffic acquisition costs were RMB
9.7 billion ($1.48 billion),
representing 11.4% of total revenues, compared to 14.7% in
2016.
Bandwidth costs as a component of cost of revenues were
RMB 5.6 billion ($854 million), representing 6.6% of total
revenues, compared to 6.7% in 2016.
Depreciation costs as a component of cost of revenues
were RMB 3.4 billion ($521 million), representing 4.0% of total
revenues, compared to 4.4% in 2016.
Operational costs as a component of cost of revenues were
RMB 4.7 billion ($722 million), representing 5.5% of total
revenues, compared to 6.3% in 2016.
Content costs as a component of cost of revenues were
RMB 13.4 billion ($2.06 billion), representing 15.8% of total
revenues, compared to 11.1% in 2016. The year-over-year increase
was mainly due to iQIYI's increased content costs.
Selling, general and administrative expenses were
RMB 13.1 billion ($2.02 billion), representing a decrease of 13%
from 2016, primarily due to a decrease in promotional spending.
Research and development expenses totaled RMB 12.9 billion ($1.99
billion), representing a 27% increase from 2016. The
increase was primarily due to the growth of research and
development personnel-related costs.
Share-based compensation expenses, which were allocated
to related operating cost and expense line items, were RMB 3.2 billion ($499
million), compared to RMB 1.8
billion in 2016.
Operating profit was RMB 15.7
billion ($2.41 billion), a 56%
increase from 2016. Non-GAAP operating profit was
RMB 18.9 billion ($2.91 billion), representing a 60% increase from
2016.
Other income, net was RMB 4.6
billion ($707 million), which
mainly consisted of the investment gain recognized as a result of
disposal of Baidu Deliveries. Other income, net was RMB3.8 billion in 2016, which mainly consisted of
the investment gain recognized as a result of Baidu's exchange of
Uber China shares with Didi.
Income tax expense was RMB 3.0
billion ($460 million),
compared to an income tax expense of RMB 2.9
billion in 2016. Effective tax rate was 14%, compared to 20%
in 2016. The decrease in the effective tax rate was primarily due
to the nontaxable investment gain.
Net income attributable to Baidu was RMB 18.3 billion ($2.81
billion), representing a 57% increase from 2016. Diluted
earnings attributable to Baidu per ADS amounted to RMB 52 ($8.06).
Non-GAAP net income attributable to Baidu was RMB 22.3 billion ($3.42
billion), a 68% increase from 2016. Non-GAAP diluted
earnings per ADS was RMB 64
($9.79).
Net operating cash inflow was RMB
32.9 billion ($5.05 billion)
and capital expenditures were RMB 4.8
billion ($735 million).
Recent Development
Baidu's online video subsidiary, iQIYI, Inc. ("iQiyi"), has
submitted a draft registration statement on Form F-1 in compliance
with the U.S. Securities Act of 1933, as amended (the "Securities
Act") to the U.S. Securities and Exchange Commission (the "SEC")
for a proposed initial public offering of iQiyi and listing of
iQiyi's American depositary shares representing its ordinary shares
on a major stock exchange in the U.S. (the "Proposed IPO"). The
Proposed IPO is expected to commence as capital markets conditions
permit and is subject to iQiyi's public filing of the registration
statement with the SEC in compliance with the Securities Act, and
the SEC declaring such registration statement effective. The
proposed number of American depositary shares to be offered and
sold in the Proposed IPO has not yet been determined. Baidu expects
to remain iQiyi's controlling shareholder after the completion of
the Proposed IPO.
This announcement is being made pursuant to and in accordance
with Rule 135 under the Securities Act. This press release is not
intended to, and does not, constitute an offer to sell or a
solicitation of an offer to purchase any securities, in
the United States or elsewhere,
and it is not intended to, and does not, constitute an offer,
solicitation or sale of any securities in any state or jurisdiction
in which such an offer, solicitation or sale would be unlawful. Any
public offering of securities to be made in the United States will be made by means of a
prospectus that may be obtained from the issuer or the selling
security holder and that will contain detailed information about
the issuer and management, as well as financial statements.
Financial Guidance
For the first quarter of 2018, Baidu expects net revenues to be
between RMB19.86 billion
($3.05 billion) and RMB20.97 billion ($3.22
billion), representing a 25% to 32% increase year over year.
Excluding disposed businesses, such as mobile games and Baidu
Deliveries, the guidance represents a 29% to 36% increase year over
year. This forecast reflects Baidu's current and preliminary view,
which is subject to substantial uncertainty.
Starting on January 1, 2018, Baidu
adopted a new revenue accounting standard (ASC 606). The most
significant impact will be the reclassification of value added tax
from cost of revenues to net against revenues. If presented net of
value added tax, revenues for fiscal 2017 would have been
approximately 5.6% lower than currently presented. The above
guidance reflects Baidu's new reporting requirement. If presented
on the same basis as 2017, gross revenues are expected to be
between RMB 21.05 billion
($3.24 billion) and RMB22.23 billion ($3.42
billion), representing a 25% to 32% increase year over
year.
Conference Call Information
Baidu's management will hold an earnings conference call at
8:00 PM on February 13, 2018, U.S. Eastern Time
(9:00 AM on February 14, 2018, Beijing/Hong Kong Time). Dial-in details for
the earnings conference call are as follows:
International:
|
+65
67135090
|
China
|
4006208038
|
US:
|
+1
8456750437
|
UK:
|
+44
2036214779
|
Hong Kong:
|
+852
30186771
|
|
|
Passcode for all
regions:
|
4299938
|
A replay of the conference call may be accessed by phone at the
following number until February 21,
2018:
International:
|
+61 2 8199
0299
|
|
|
Passcode:
|
4299938
|
Additionally, a live and archived webcast of this conference
call will be available at http://ir.baidu.com.
About Baidu
Baidu, Inc. is the leading Chinese language Internet search
provider. Baidu aims to make a complex world simpler through
technology. Baidu's ADSs trade on the NASDAQ Global Select Market
under the symbol "BIDU." Currently, ten ADSs represent one Class A
ordinary share.
Contacts
Investors Relations, Baidu, Inc.
Tel: +86-10-5992-4958
Email: ir@baidu.com
Safe Harbor Statement
This announcement contains forward-looking statements. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
"will," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates," "confident" and similar statements. Among
other things, the outlook for the first quarter of 2018, quotations
from management in this announcement, as well as Baidu's and other
parties' strategic and operational plans, contain forward-looking
statements. Baidu may also make written or oral forward-looking
statements in its periodic reports to the U.S. Securities and
Exchange Commission, in its annual report to shareholders, in press
releases and other written materials and in oral statements made by
its officers, directors or employees to third parties. Statements
that are not historical facts, including but not limited to
statements about Baidu's beliefs and expectations, are
forward-looking statements. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement, including but not limited to the
following: Baidu's growth strategies; its future business
development, including development of new products and services;
its ability to attract and retain users and customers; competition
in the Chinese Internet search market; competition for online
marketing customers; changes in the Company's revenues and certain
cost or expense items as a percentage of its revenues; the outcome
of ongoing, or any future, litigation or arbitration, including
those relating to intellectual property rights; the expected growth
of the Chinese language Internet search market and the number of
Internet and broadband users in China; Chinese governmental policies relating
to the Internet and Internet search providers and general economic
conditions in China, Japan and elsewhere. Further information
regarding these and other risks is included in the Company's annual
report on Form 20-F and other documents filed with the Securities
and Exchange Commission. Baidu does not undertake any obligation to
update any forward-looking statement, except as required under
applicable law. All information provided in this press release and
in the attachments is as of the date of the press release, and
Baidu undertakes no duty to update such information, except as
required under applicable law.
Non-GAAP Financial Measures
To supplement Baidu's consolidated financial results presented
in accordance with GAAP, Baidu uses the following non-GAAP
financial measures: non-GAAP operating profit, non-GAAP net income
attributable to Baidu, non-GAAP diluted earnings per ADS, adjusted
EBITDA and free cash flow. The presentation of these non-GAAP
financial measures is not intended to be considered in isolation or
as a substitute for the financial information prepared and
presented in accordance with GAAP.
Baidu believes that these non-GAAP financial measures provide
meaningful supplemental information regarding its performance and
liquidity by excluding certain items that may not be indicative of
its recurring core business operating results, such as operating
performance excluding not only non-cash charges, but also other
items that are infrequent or unusual in nature. The Company
believes that both management and investors benefit from referring
to these non-GAAP financial measures in assessing its performance
and when planning and forecasting future periods. These non-GAAP
financial measures also facilitate management's internal
comparisons to Baidu's historical performance and liquidity. The
Company believes these non-GAAP financial measures are useful to
investors in allowing for greater transparency with respect to
supplemental information used by management in its financial and
operational decision making. A limitation of using these non-GAAP
financial measures is that these non-GAAP measures exclude certain
items that have been and will continue to be for the foreseeable
future a significant component in the Company's results of
operations. These non-GAAP financial measures presented here
may not be comparable to similarly titled measures presented by
other companies. Other companies may calculate similarly titled
measures differently, limiting their usefulness as comparative
measures to the Company's data.
Non-GAAP operating profit represents operating profit excluding
share-based compensation expenses.
Non-GAAP net income attributable to Baidu represents net
income attributable to Baidu excluding share-based compensation
expenses and the gain or loss associated with the issuance of
shares by Baidu's equity method investees at a price higher or
lower than the carrying value per share. Non-GAAP diluted earnings
per ADS represents diluted earnings per ADS calculated based on
non-GAAP net income attributable to Baidu. Adjusted EBITDA
represents operating profit excluding depreciation, amortization
and share-based compensation expenses. Free cash flow represents
net cash provided by operating activities less capital
expenditures.
For more information on non-GAAP financial measures, please see
the tables captioned "Reconciliations of non-GAAP financial
measures to the nearest comparable GAAP measures."
[1] This announcement contains translations of certain RMB
amounts into U.S. dollars at specified rates solely for the
convenience of the reader. Unless otherwise noted, all translations
from RMB to U.S. dollars are made at a rate of RMB6.5063 to US$1.00, the effective noon buying rate as of
December 29, 2017, in The
City of New York for cable
transfers of RMB as certified for customs purposes by the Federal
Reserve Bank of New York.
[2] Non-GAAP net income attributable to Baidu represents net
income attributable to Baidu excluding share-based compensation
expenses and the gain or loss associated with the issuance of the
shares by our equity method investees at a price higher or lower
than our carrying value per share.
[3] Non-GAAP diluted earnings per ADS represents diluted
earnings per ADS calculated based on non-GAAP net income
attributable to Baidu.
[4] The number of active online marketing customers and revenue
per online active customer exclude our group-buying and delivery
related businesses for consistency with previous reporting.
Baidu,
Inc.
|
Condensed
Consolidated Statements of Income
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
September
30,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
(In RMB millions
except for share, per share (or ADS) information)
|
|
2016
|
|
2017
|
|
2017
|
|
2016
|
|
2017
|
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Audited
|
|
Unaudited
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Online marketing
services
|
|
16,166
|
|
20,108
|
|
20,418
|
|
64,525
|
|
73,146
|
Other
services
|
|
2,046
|
|
3,381
|
|
3,138
|
|
6,024
|
|
11,663
|
Total
revenues
|
|
18,212
|
|
23,489
|
|
23,556
|
|
70,549
|
|
84,809
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs
and expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
(note 1, 2)
|
|
(9,721)
|
|
(11,801)
|
|
(11,446)
|
|
(35,278)
|
|
(43,062)
|
Selling, general
and administrative (note 2)
|
|
(3,334)
|
|
(3,746)
|
|
(3,632)
|
|
(15,071)
|
|
(13,128)
|
Research and
development (note 2)
|
|
(2,972)
|
|
(3,242)
|
|
(3,704)
|
|
(10,151)
|
|
(12,928)
|
Total
operating costs and expenses
|
|
(16,027)
|
|
(18,789)
|
|
(18,782)
|
|
(60,500)
|
|
(69,118)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
2,185
|
|
4,700
|
|
4,774
|
|
10,049
|
|
15,691
|
|
|
|
|
|
|
|
|
|
|
|
Other
income:
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
631
|
|
876
|
|
917
|
|
2,342
|
|
3,154
|
Interest
expense
|
|
(294)
|
|
(557)
|
|
(400)
|
|
(1,158)
|
|
(1,615)
|
Foreign exchange
income(loss), net
|
|
310
|
|
(130)
|
|
(113)
|
|
508
|
|
(482)
|
Loss from equity
method investments
|
|
(106)
|
|
(73)
|
|
204
|
|
(1,026)
|
|
(63)
|
Other income
(loss), net
|
|
1,796
|
|
4,229
|
|
(294)
|
|
3,794
|
|
4,598
|
Total other
income
|
|
2,337
|
|
4,345
|
|
314
|
|
4,460
|
|
5,592
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
4,522
|
|
9,045
|
|
5,088
|
|
14,509
|
|
21,283
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
(401)
|
|
(1,097)
|
|
(929)
|
|
(2,913)
|
|
(2,995)
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
4,121
|
|
7,948
|
|
4,159
|
|
11,596
|
|
18,288
|
Less: net loss
attributable to noncontrolling interests
|
|
(8)
|
|
(1)
|
|
-
|
|
(36)
|
|
(13)
|
Net income
attributable to Baidu
|
|
4,129
|
|
7,949
|
|
4,159
|
|
11,632
|
|
18,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
for Class A and Class B ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
114.32
|
|
242.48
|
|
125.02
|
|
319.47
|
|
527.51
|
Diluted
|
|
113.98
|
|
240.49
|
|
123.81
|
|
318.62
|
|
524.08
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ADS (1
Class A ordinary share equals 10 ADSs ):
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
11.43
|
|
24.25
|
|
12.50
|
|
31.95
|
|
52.75
|
Diluted
|
|
11.40
|
|
24.05
|
|
12.38
|
|
31.86
|
|
52.41
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of Class A and Class B ordinary shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
34,712,363
|
|
34,703,924
|
|
34,783,969
|
|
34,665,238
|
|
34,725,123
|
Diluted
|
|
34,816,049
|
|
34,991,177
|
|
35,123,903
|
|
34,757,086
|
|
34,952,391
|
|
|
|
|
|
|
|
|
|
|
|
(1) Cost of
revenues are detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
Sales tax and
surcharges
|
|
(1,239)
|
|
(1,700)
|
|
(1,713)
|
|
(4,717)
|
|
(6,181)
|
Traffic
acquisition costs
|
|
(2,636)
|
|
(2,476)
|
|
(2,518)
|
|
(10,373)
|
|
(9,657)
|
Bandwidth
costs
|
|
(1,235)
|
|
(1,440)
|
|
(1,400)
|
|
(4,716)
|
|
(5,558)
|
Depreciation
costs
|
|
(812)
|
|
(852)
|
|
(885)
|
|
(3,075)
|
|
(3,388)
|
Operational
costs
|
|
(1,186)
|
|
(1,383)
|
|
(1,130)
|
|
(4,430)
|
|
(4,697)
|
Content
costs
|
|
(2,571)
|
|
(3,897)
|
|
(3,754)
|
|
(7,864)
|
|
(13,398)
|
Share-based
compensation expenses
|
|
(42)
|
|
(53)
|
|
(46)
|
|
(103)
|
|
(183)
|
Total cost of
revenues
|
|
(9,721)
|
|
(11,801)
|
|
(11,446)
|
|
(35,278)
|
|
(43,062)
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes
share-based compensation expenses as follows:
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
(42)
|
|
(53)
|
|
(46)
|
|
(103)
|
|
(183)
|
Selling, general
and administrative
|
|
(114)
|
|
(252)
|
|
(298)
|
|
(429)
|
|
(973)
|
Research and
development
|
|
(476)
|
|
(536)
|
|
(633)
|
|
(1,228)
|
|
(2,088)
|
Total
share-based compensation expenses
|
|
(632)
|
|
(841)
|
|
(977)
|
|
(1,760)
|
|
(3,244)
|
Baidu,
Inc.
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
(In RMB millions
except for number of shares and per share data)
|
|
2016
|
|
2017
|
|
|
Audited
|
|
Unaudited
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
10,898
|
|
11,084
|
Restricted
cash
|
|
318
|
|
252
|
Short-term
investments
|
|
71,196
|
|
89,381
|
Other invested
securities
|
|
7,748
|
|
18,350
|
Accounts
receivable, net
|
|
4,109
|
|
4,571
|
Loans and
interest receivable, net
|
|
1,800
|
|
23,938
|
Amounts due from
related parties
|
|
346
|
|
168
|
Other assets,
current
|
|
3,345
|
|
3,425
|
Total current assets
|
|
99,760
|
|
151,169
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
Fixed assets,
net
|
|
11,294
|
|
12,475
|
Intangible
assets, net
|
|
3,872
|
|
5,467
|
Goodwill
|
|
15,342
|
|
15,806
|
Long-term
investments, net
|
|
45,690
|
|
56,283
|
Loans and
interest receivable, net
|
|
2,709
|
|
3,467
|
Amounts due from
related parties
|
|
11
|
|
9
|
Deferred tax
assets, net
|
|
1,100
|
|
1,532
|
Other assets,
non-current
|
|
2,219
|
|
5,520
|
Total non-current assets
|
|
82,237
|
|
100,559
|
|
|
|
|
|
Total
assets
|
|
181,997
|
|
251,728
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Short-term
loans
|
|
1,115
|
|
1,244
|
Amounts
due to the third-party investors
|
|
7,025
|
|
38,486
|
Accounts payable and
accrued liabilities
|
|
21,630
|
|
27,523
|
Customer advances and
deposits
|
|
6,032
|
|
6,785
|
Deferred
revenue
|
|
596
|
|
788
|
Deferred
income
|
|
566
|
|
568
|
Long-term loans,
current portion
|
|
3,468
|
|
10
|
Notes payable, current
portion
|
|
5,203
|
|
6,500
|
Capital lease
obligation
|
|
8
|
|
-
|
Amounts due to related
parties
|
|
459
|
|
153
|
Total current liabilities
|
|
46,102
|
|
82,057
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
Deferred
income
|
|
28
|
|
73
|
Long-term
loans
|
|
6,822
|
|
6,701
|
Notes
payable
|
|
27,648
|
|
29,111
|
Deferred tax
liabilities
|
|
3,589
|
|
3,375
|
Other non-current
liabilities
|
|
65
|
|
39
|
Total non-current liabilities
|
|
38,152
|
|
39,299
|
|
|
|
|
|
Total
liabilities
|
|
84,254
|
|
121,356
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
5,492
|
|
11,022
|
|
|
|
|
|
Equity
|
|
|
|
|
Class A ordinary
shares, par value US$0.00005 per share,
825,000,000 shares authorized, and 27,325,551
shares
and 27,614,978 shares issued and outstanding as of
December 31, 2016 and December 31, 2017
|
|
-
|
|
-
|
Class B ordinary
shares, par value US$0.00005 per share,
35,400,000 shares authorized, and 7,401,254 shares and
7,201,254 shares issued and outstanding as of
December 31, 2016 and December 31, 2017
|
|
-
|
|
-
|
Additional paid-in
capital
|
|
8,323
|
|
12,088
|
Retained
earnings
|
|
85,734
|
|
102,328
|
Accumulated other
comprehensive income(loss)
|
|
(1,783)
|
|
930
|
Total Baidu, Inc. shareholders' equity
|
|
92,274
|
|
115,346
|
Noncontrolling interests
|
|
(23)
|
|
4,004
|
Total
equity
|
|
92,251
|
|
119,350
|
|
|
|
|
|
Total liabilities,
redeemable noncontrolling interests, and equity
|
|
181,997
|
|
251,728
|
Reconciliations of
non-GAAP financial measures to the nearest comparable GAAP
measures (in RMB millions except for share and per ADS
information, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
December 31,
2016
|
|
September 30,
2017
|
|
December 31,
2017
|
|
December 31,
2016
|
|
December 31,
2017
|
Operating
profit
|
2,185
|
|
4,700
|
|
4,774
|
|
10,049
|
|
15,691
|
Add:
Share-based compensation expenses
|
632
|
|
841
|
|
977
|
|
1,760
|
|
3,244
|
Non-GAAP operating
profit
|
2,817
|
|
5,541
|
|
5,751
|
|
11,809
|
|
18,935
|
Add:
Depreciation of fixed assets
|
912
|
|
957
|
|
993
|
|
3,451
|
|
3,805
|
Add:
Amortization of intangible assets
|
126
|
|
347
|
|
110
|
|
532
|
|
594
|
Adjusted
EBITDA
|
3,855
|
|
6,845
|
|
6,854
|
|
15,792
|
|
23,334
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
December 31,
2016
|
|
September 30,
2017
|
|
December 31,
2017
|
|
December 31,
2016
|
|
December 31,
2017
|
Net income
attributable to Baidu
|
4,129
|
|
7,949
|
|
4,159
|
|
11,632
|
|
18,301
|
Add:
Share-based compensation expenses
|
632
|
|
841
|
|
977
|
|
1,760
|
|
3,244
|
Add: (Gain)loss
associated with the dilution of equity method investees
|
(156)
|
|
286
|
|
97
|
|
(173)
|
|
726
|
Non-GAAP net
income attributable to Baidu
|
4,605
|
|
9,076
|
|
5,233
|
|
13,219
|
|
22,271
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of ADS used in computing GAAP and non-GAAP diluted earnings
per ADS
|
348,160,487
|
|
349,911,767
|
|
351,239,027
|
|
347,570,857
|
|
349,523,907
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted
earnings per ADS
|
11.40
|
|
24.05
|
|
12.38
|
|
31.86
|
|
52.41
|
Add: Accretion
of the redeemable noncontrolling interests
|
0.46
|
|
(1.33)
|
|
(0.54)
|
|
1.61
|
|
(0.05)
|
Add:
Share-based compensation expenses
|
1.82
|
|
2.40
|
|
2.78
|
|
5.06
|
|
9.28
|
Add: Dilution (Gain)
loss associated with equity method investees
|
(0.45)
|
|
0.82
|
|
0.28
|
|
(0.50)
|
|
2.08
|
Non-GAAP diluted
earnings per ADS
|
13.23
|
|
25.94
|
|
14.90
|
|
38.03
|
|
63.72
|
Reconciliation
from net cash provided by operating activities to free cash flow
(in RMB millions, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
As a %
of
|
|
Three months
ended
|
As a %
of
|
|
Three months
ended
|
As a %
of
|
|
Twelve months
ended
|
As a %
of
|
|
Twelve months
ended
|
As a %
of
|
|
December 31,
2016
|
total
revenues
|
|
September 30,
2017
|
total
revenues
|
|
December 31,
2017
|
total
revenues
|
|
December 31,
2016
|
total
revenues
|
|
December 31,
2017
|
total
revenues
|
Net cash provided
by operating activities
|
8,011
|
44%
|
|
10,517
|
45%
|
|
9,967
|
42%
|
|
22,258
|
32%
|
|
32,880
|
39%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Capital
expenditures
|
(1,201)
|
-7%
|
|
(1,297)
|
-6%
|
|
(1,188)
|
-5%
|
|
(4,189)
|
-6%
|
|
(4,779)
|
-6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash
flow
|
6,810
|
37%
|
|
9,220
|
39%
|
|
8,779
|
37%
|
|
18,069
|
26%
|
|
28,101
|
33%
|
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SOURCE Baidu, Inc.