Hello and thank you for standing by for Baidu's Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After management's 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. I would like to turn the meeting over to your host for today's conference, Juan Lin, Baidu's Director of Investor Relations.

Hello, everyone, and welcome to Baidu's fourth quarter and fiscal year 2024 earnings conference call. Baidu's earnings release was distributed earlier today and you can find a copy on our website, as well as on Newswire services. On the call today, we have Robin Li, our Co-Founder and CEO; Rong Luo, our EVP in charge of Baidu Mobile Ecosystem Group, MEG; Dou Shen, our EVP in charge of Baidu AI Cloud Group, ACG; and Jackson Junjie He, our Interim CFO. After our prepared remarks, we will hold a Q&A session. Please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest Annual Report and other documents filed with SEC and Hong Kong Stock Exchange. Baidu does not undertake any obligation to update any forward-looking statements except as required under applicable law. Our earnings press release and this call include discussions of certain unaudited non-GAAP financial measures. Our press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures, and is available on our website at ir.baidu.com. As a reminder, this conference will be recorded. In addition, the webcast of this conference call will be available on Baidu's IR website. I will now turn the call over to our CEO, Robin.

Hello, everyone. Baidu core total revenue for the fourth quarter saw a slight year-over-year increase, reaching RMB27.7 billion. Our AI Cloud business demonstrated robust momentum with revenue growth accelerating to 26% year-over-year, offsetting the softness in our online marketing business. The growth was primarily driven by broad market recognition of our AI capabilities, in which we will continue to invest to make sure we stay at the forefront of this technology megatrend. 2024 marked a pivotal year as GenAI demonstrated strong market demand. We see this momentum reflected in the genuine value we created for our customers through our AI products and solutions as well as AI cloud services. This growth shows how enterprises have awakened to AI's transformative potential, catalyzing broader adoption across diverse scenarios, while affirming the market's trust in Baidu's technical capabilities and AI expertise. As we continue to cement our leadership position as an AI innovator, our vision is gradually coming to fruition on multiple fronts. Our strategic AI investments are showing meaningful progress across our key businesses. Our cloud business demonstrated strengthening momentum towards the end of the year with both robust revenue growth and margin expansion. As we continue to rebuild the entire product portfolio of our mobile ecosystem with AI, most notably in Baidu Search. Meanwhile, Baidu's autonomous ride-hailing service, Apollo Go has proven the viability of its business model, strengthening our confidence in pursuing global expansion and exploring asset-light business models. ERNIE has demonstrated industry-leading capabilities in instruction following and state-of-the-art RAG technology that minimizes hallucination. This best-in-class capabilities have driven widespread adoption across various scenarios, leading to significantly growing API costs. In December, ERNIE handled approximately 1.65 billion API costs daily. We witnessed a particularly strong external demand with external API costs growing 178% quarter-over-quarter. We saw rapid growth across various business sectors such as education, e-commerce, entertainment and recruitment. The robust growth in external API cost is driven by two reasons. First, businesses are finding enough value from integrating ERNIE into their daily operations. Second, price matters. As the inference cost goes down, adoption goes up quite quickly. We recently made a significant strategic decision to open source our upcoming ERNIE 4.5 series and make ERNIE Bot free for end users, which we believe will further expand market awareness of ERNIE's capabilities and enable broader adoption across an increasing array of industries. Reflecting this growing market recognition, our AI Cloud business delivered a robust performance. In Q4, we have partnered with leading enterprises across diverse sectors, helping them address specific operational challenges using our AI products and solutions. We collaborated with State Grid Corporation of China to develop a tailored AI solution based on ERNIE and our MaaS platform, Tianfeng. We have developed comprehensive AI solutions that permeate key operational processes. From power dispatching and equipment condition diagnosis to procurement, safety supervision, marketing and office systems. Our solutions have demonstrated remarkable effectiveness in boosting operational reliability. Impressed by these results, State Grid has increased its spending on our AI Cloud services, further deepening its collaboration with us. We also collaborated with a leading recruitment company to adopt an ERNIE-powered outbound calling product for campus recruitment, featuring highly human-like voice with natural conversational abilities. The product enables sophisticated multi-round interactions. ERNIE's advanced capabilities ensured accurate gauging of candidates' interests in job opportunities while consistently keeping conversations on track. With this product, the company achieved a 50% higher acceptance rate for job fair invitations and 70% lower labor costs. The growing market recognition and adoption reinforced our confidence, and we are optimistic that the growth momentum we witnessed today is just a start. As enterprises continue to discover novel ways to harness ERNIE and our AI Cloud potential, we foresee an ever-expanding horizon of possibilities unfolding before us. On the consumer-facing product, Baidu Wenku is a shining example. In Q4, Wenku's subscription revenue grew 21% year-over-year. In December, Wenku's monthly active user of AI-enabled features reached 94 million, almost doubling quarter-over-quarter, making Wenku one of the world's largest AI products by the number of paying users. This quarter, we integrated Baidu Wenku with Baidu Drive, enhancing Wenku App and AI-powered creativity platform. This integration allows Wenku to combine personal cloud storage with AI-powered search and document creation capabilities, while enabling users to streamline their workflow from searching, accessing files, to creating and sharing within a unified seamless platform. Furthermore, Wenku introduced Free Canvas in January which transforms content creation by enabling users to organize diverse formats, text, slides, audio, videos and even website links on a unified campus. Free Campus also integrates with Wenku's existing AI capabilities, including AI-editor and AI-powered PowerPoint features, allowing users to access our full suite of AI editing tools and save or share their work in any desired format via Baidu Drive. Leveraging ERNIE, Wenku is transforming into a next-generation intelligent creativity platform that redefines how users create, collaborate and bring their ideas to life. Now turning to search, our largest consumer-facing product, which stands as another compelling testament to our AI transformation. Over the past several quarters, we have aggressively leveraged ERNIE to transform search. This has been a challenging but deeply meaningful journey like pioneers crossing unfamiliar waters; we embraced the uncertainties that come with starting new characters. After extensive exploration, we have defined our path forward in leveraging the power of language models to present multimedia content in search results. Currently, 22% of our search result pages contain AI-generated content. During the quarter, we mainly focused on redefining and enhancing the quality of our AI-generated search results. Through ERNIE's advanced capabilities in content generation, we can deliver unlimited high-quality content on demand, vastly expanding the depth and breadth of our search results. This quarter, we expanded beyond text generation to generate diverse content formats, including short videos, nodes, agents, digital humans and live streaming. Through this more dynamic and varied content combination, users can now discover a broader range of information that was previously inaccessible, presented in more engaging ways that align with evolving user preferences. As a result, we have achieved substantial improvements across three dimensions of our search results: quality, quantity, and format diversity. Alongside this, we further enhanced the search experience by optimizing the matching between queries and search results. By analyzing the nature and intent of each query, the GenAI-enabled search can determine the optimal content format and presentation style, such as delivering AI-generated short videos for how-to queries, generating comparative charts for analysis-focused searches, and dynamically organizing content sequences. This intelligent matching ensures that users receive not just the most relevant results but in the most effective and easy-to-understand format. The effectiveness of this transformation is reflected in our improved user metrics. On the Baidu App, users exposed to AI-generated search results demonstrated higher engagement levels, conducted more search queries, and showed higher retention rates and longer time spent. We are encouraged to see daily search queries per user increased by 2% year-over-year in December. During our AI transformation of search, we placed strong emphasis on agents as we envision agents will become one of the most important forms of AI native applications. Our agents have now transcended their initial chatbot origins through convergence with digital human technology, evolving into embodied intelligent entities with vivid visual presence, thanks to our industry-leading digital human technology. This represents a powerful innovation path we pioneered, breaking new ground in how agents interact with users. Taking our newly introduced lawyer agents as an example. These embodied lawyer agents can transform legal expertise and industry know-how into engaging multimodal content, featuring lawyers' actual appearance in live streaming and AI-generated short videos. Through these agents, we can efficiently generate high-quality authoritative content at scale for Baidu Search and feed, while pioneering innovative formats of content and user engagement. Moreover, these agents also create significant value for lawyers by helping them build personal brands, enhance engagement with potential clients and improve lead conversion. Such agents are becoming a compelling new addition to Baidu's content ecosystem, creating new possibilities while further diversifying our content landscape. In the field of intelligent driving, our continued investments in AI are also propelling significant progress in our Robotaxi business. In Q4, Apollo Go delivered remarkable results that reinforced our position as the world's top autonomous ride-hailing service provider. Our domestic operations continue to show robust momentum, and we have successfully validated our pioneering business model through years of operations and established a path to profitability in the autonomous driving industry. Importantly, our unrelenting focus on safety remains at the core of our efforts as we expand our services. To date, Apollo Go has accumulated more than 130 million autonomous kilometers with an outstanding safety record, underscoring our industry-leading standards. This operational and safety track record has paved the way for further scaling and operational enhancement. Building on this achievement, we are confident in expanding beyond Mainland China as we enter the next phase of growth. In November 2024, Apollo Go secured permits to conduct testing on open roads in Hong Kong, making us the only company to receive Robotaxi testing authorization in the region. Notably, Hong Kong represents our first entry into a right-hand drive left-hand traffic market, showcasing our ability to adapt our autonomous driving technology to different traffic systems while maintaining rigorous safety standards. This achievement recognizes our deep expertise in autonomous driving operations as we are committed to expanding our footprint and bringing safe, reliable and convenient autonomous ride-hailing services to more cities and regions worldwide. Now let me review the key highlights for each business for the fourth quarter. AI Cloud revenue reached RMB7.1 billion in Q4, delivering a strong year-over-year increase of 26% with expanding non-GAAP operating margins. This quarter, we doubled the scale of our unified GPU cluster, we still achieved a 99% valid training time. A remarkable achievement enabled by our faster and more advanced network architecture. Our network has proven the capability to enable GPUs across different geographical locations to work together seamlessly with minimal performance loss, and automatically resolve the frequent network issues inherent in large-scale computing with almost imperceptible impact to our clients, demonstrating our ability to deliver peak performance at a massive scale. We continue to enhance our MaaS platform, which improves the model and app development experience for our customers and partners. Our platform features the ERNIE family of models and offers access to a selection of high-quality models across the globe with DeepSeek being one of our latest additions. We offer post-training, SFT, data labeling, and preparation for our models hosted on Tianfeng, enabling us to deliver the most suitable models and tools to enterprise clients at all scales. The increasing market recognition of our AI expertise continues to drive strong momentum in our enterprise client pipeline. We have established deep partnerships with leading enterprises, further highlighting the growing trust in Baidu AI Cloud. Besides, we are increasingly becoming the preferred choice for mid-tier businesses. This reflects the strengthening competitiveness of our AI infrastructure and marks a healthy evolution and diversification of our customer portfolio. For our mobile ecosystem, our current priority is to further enhance the user experience and refine our product features. We will explore monetization opportunities after our GenAI-enabled search product features and framework become sufficiently refined. Additionally, we continue to see agents emerging as a promising avenue for monetization, which represents meaningful growth potential for our advertising business. In December, over 27,000 advertisers have been generating ad spending through ERNIE agents on a daily basis with rapid growth in healthcare, legal, education, and B2B sectors. This rapid adoption stems from agents' unique ability to address their specific pain points. Agents can quickly master complex non-standardized service portfolios, a task that traditionally requires lengthy training for human customer service representatives, while efficiently qualifying these from standard customer inquiries through intelligent multi-round interactions. For intelligent driving, in Q4, Apollo Go provided approximately 1.1 million rides to the public nationwide, representing a year-over-year growth of 36%. In January, the cumulative rides provided to the public exceeded 9 million. Also, we reached another milestone recently with the successful transition to 100% fully leveraged operations nationwide. Building on this strong momentum and with an unwavering commitment to safety as our top priority, we expect to see even faster growth in our ride volumes, with a significant acceleration anticipated in 2025, as we further scale our operations. We continue to improve the technology as we scale up, combined with our validated business model and initial steps in expanding our global footprint. We believe we are well-positioned to create substantial value and reshape the future of mobility. Driven by our deep-rooted belief in technology and conviction in AI long-term value creation potential, we will continue to invest to make sure we stand at the forefront of cutting-edge AI technology and deploy that to all our products across the board. With that, let me turn the call over to Jackson to go through the financial results.

Thank you, Robin. Now let me walk through the details of our fourth quarter and full year 2024 financial results. Total revenues in the fourth quarter were RMB34.1 billion, decreasing 2% year-over-year. Total revenues for the full year 2024 were RMB133.1 billion, decreasing 1% year-over-year. Baidu core's Q4 revenues were RMB27.7 billion, increasing 1% year-over-year. In 2024, Baidu Core generated RMB104.7 billion in revenue, increasing 1% year-over-year. Baidu Core’s online marketing revenue decreased 7% year-over-year to RMB17.9 billion in Q4, accounting for 65% of Baidu Core's total revenues. Baidu Core online marketing revenue decreased by 3% year-over-year in 2024. Baidu Core's non-online marketing revenue was RMB9.8 billion, up 18% year-over-year. For the full year 2024, the non-online marketing business increased 12% year-over-year. The increase in the non-online marketing business was mainly driven by AI Cloud business. Revenue from iQIYI was RMB6.6 billion in Q4, decreasing 14% year-over-year. Revenue from iQIYI was RMB29.2 billion in 2024, decreasing 8% year-over-year. Cost of revenues was RMB18 billion in Q4, increasing 3% year-over-year, primarily due to the increase in traffic acquisition costs, costs related to AI cloud business, and a one-time write-down of inventories, partially offset by a decrease in personnel-related expenses and content costs. Cost of revenue was RMB66.1 billion in 2024, increasing 2% year-over-year primarily due to an increase in traffic acquisition costs, bandwidth costs, and server custody fees, partially offset by a decrease in personnel-related expenses and content costs. Operating expenses were RMB12.2 billion in Q4, which remained flat compared to the same period last year, primarily due to an increase in expected credit losses, server depreciation expenses, and server custody fees, which are for Gen-AI research and development input, and channel spending and promotional marketing expenses, partially offset by a decrease in personnel-related expenses. A portion of the increase in expected credit losses was pertaining to a one-time accrual. Operating expenses were RMB45.8 billion in 2024, decreasing 4% year-over-year, primarily due to a decrease in personnel-related expenses. Operating income was RMB3.9 billion in Q4 compared to RMB5.4 billion for the same period last year. Baidu Core's operating income was RMB3.6 billion, and Baidu Core operating margin was 13% in Q4 compared to RMB4.7 billion and 17% for the same period last year. The decrease was due to one-time losses that included accrual of credit losses, write-down of inventories, and others. Operating income was RMB21.3 billion in 2024. Baidu Core's operating income was RMB19.5 billion, and Baidu Core operating margin was 19% in 2024. Non-GAAP operating income was RMB5 billion in Q4; non-GAAP Baidu Core operating income was RMB4.6 billion and non-GAAP Baidu Core operating margin was 17% in Q4. Non-GAAP operating income was RMB26.2 billion in 2024. Non-GAAP Baidu Core operating income was RMB23.9 billion and non-GAAP Baidu Core operating margin was 23% in 2024. In Q4, total other income net was RMB2.7 billion, compared to total other loss net of RMB2.5 billion for the same period last year, mainly due to the increase in net foreign exchange gain arising from exchange rate fluctuation between renminbi and the U.S. dollar. And a decrease in pickup losses from equity method investment, which modified certain terms of its preferred shares and resulted in significant loss pickup in 2023. Income tax expense was RMB1.6 billion. In 2024, total other income net was RMB7.4 billion, increasing 120% year-over-year, primarily due to a decrease in pickup losses. Income tax expense was RMB4.4 billion. In Q4, net income attributable to Baidu was RMB5.2 billion, and diluted earnings per ADS was RMB14.26. Net income attributable to Baidu Core was RMB5.3 billion, and net margin for Baidu Core is 19%. Non-GAAP net income attributable to Baidu was RMB6.7 billion. Non-GAAP diluted earnings per ADS was RMB19.19. Non-GAAP net income attributable to Baidu Core was RMB3.7 billion and non-GAAP net margin for Baidu Core is 24%. In 2024, net income attributable to Baidu was RMB23.8 billion, and diluted earnings per ADS was RMB65.91. Net income attributable to Baidu Core was RMB23.4 billion and net margin for Baidu Core was 22%. Non-GAAP net income attributable to Baidu was RMB27 billion. Non-GAAP diluted earnings per ADS was RMB76.85. Non-GAAP net income attributable to Baidu Core was RMB26.3 billion. And non-GAAP net margin for Baidu Core was 25%. As of December 31, 2024, cash, cash equivalents, restricted cash, and short-term investments were RMB139.1 billion, and cash, cash equivalents, restricted cash, and short-term investments, excluding iQIYI, were RMB134.7 billion. Free cash flow was RMB13.1 billion and free cash flow, excluding iQIYI, was RMB11.1 billion in 2024. We define net cash position as cash and cash equivalents plus total restricted cash, deposits, and others, less total loans, convertible senior notes, and notes payable. As of December 31, 2024, net cash position for Baidu was RMB170.5 billion. Baidu Core had approximately 31,000 employees as of December 31, 2024. With that, operator, let's now open the call to questions.

Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from Alicia Yap with Citigroup. Please go ahead.

Thank you and good evening management. Thanks for taking my questions. My question is on the latest hot topic. So we have seen DeepSeek gaining a lot of attention lately and by do a recent announcement for the open sourcing, the upcoming ERNIE 4.5-series and also making ERNIE Bot for free. So could management share with us the strategic thinking behind this move? And also how do we view the current competitive landscape of the foundations models? How does Baidu plan to stay ahead of this evolving market? Thank you.

Hi, Alicia, let me answer your questions. The GenAI and Foundation Model market is still nascent, but moving at a very fast pace. The DeepSeek success story will certainly accelerate the adoption rate of foundation models. As foundation models become more accessible and affordable, I believe we are entering a truly transformative phase. We are seeing an explosion of new AI applications and use cases that will open up incredible opportunities and push the boundaries of what's possible with AI. One thing we learned from DeepSeek is that open sourcing the best models can greatly help adoption. When the model is open source, people naturally want to try it out of curiosity, which helps drive broader adoption. ERNIE 4.5 will be our best models ever. And we would like to have our users and customers try them out more easily than before. So our decision to open source ERNIE 4.5 series is also backed by our deep confidence in our technology leadership. This conviction stems from our decade-long commitment to R&D investment, our continuous technological innovation and our unique position as one of the few companies worldwide with four-stack AI capabilities. ERNIE has already demonstrated strong market traction with daily API costs surging from 50 million to 1.65 billion in just one year. So through open sourcing, we believe more developers and users will recognize ERNIE's true value, driving even broader adoption and expanding its impact across more scenarios. Similarly, making ERNIE Bot free will enable more users to compare our Foundation models with other models on an apple-to-apple basis because they don't charge. Last time we had a major upgrade of ERNIE was in October 2023. So it is a long time ago. So stay tuned for ERNIE 4.5 in the next couple of months. Having said that, I want to emphasize one crucial point. No matter open source or closed source, Foundation models become truly valuable only when they can effectively address real-world problems at scale. We have been committed to an application-driven approach in continuously iterating ERNIE. With this mindset, since launching, we’ve been using ERNIE to renovate our products while serving enterprise customers. Internally, we've leveraged ERNIE to successfully transform our consumer-facing products like Baidu Search and Baidu Wenku. Externally, through our MaaS platform Tianfeng, we are enhancing the model and application development experience for enterprise clients. ERNIE's industry-leading capabilities in instruction following and state-of-the-art retrieval augmented generation technology minimize hallucination, have enabled wide adoption across various scenarios. And Tianfeng's comprehensive tool chain allows our customers to customize any model for their own application scenarios. Going forward, we plan to accelerate ERNIE's iteration based on performance improvement and cost-cutting potential. We will continue evolving it in areas with the greatest potential for real-world impact. We’re excited about the new chapter of AI development, and we look forward to seeing AI technology bring more groundbreaking applications that have lasting value for society. Thank you.

Thank you. Your next question comes from Lincoln Kong from Goldman Sachs. Please go ahead.

Thank you management for taking my questions. So my question is about the search business. So following recent quarters of search revamp, so how should we think about the future adjustment or changes? So what's the current mix of the GenAI result? And what's our target mix? And also as AI integration continued to deepen, could you share more color around the user metrics? Given that AI chatbot such as DeepSeek and Doba also offering search capability. So how do you view the competitiveness or the competition dynamics between Baidu Search and those AI chatbots? Thank you.

Lincoln, let me answer your questions. And currently, around 22% of all search result pages which have contained AI-generated content. However, there is much more premium listing. We have fundamentally transformed search and made it more powerful and efficient than ever before. As Robin said in the prepared remarks, with ERNIE, we have expanded the search beyond text and links to offer diverse content formats, including short videos, live streaming, agents, nodes, and short plays. These different formats can be dynamically combined to create personalized search experiences. As we continue to transform search, we are also developing capabilities that allow for deep personalization adapting to each user's habits and preferences. Our efforts have led to better user results. In January, we can see the number of monthly active users who conduct searches on Baidu App. 83% engaged with the generative AI content. What's even more encouraging is that in December, the search queries per user on the Baidu App grew by 2% year-over-year. We focus on continuously improving user experiences, expanding AI's role, as we see increasingly positive user engagements. Building on this, let me share a small case of how ERNIE agents can create value for our advertisers. During this past Chinese New Year holiday, while many small and medium enterprises were closed for one week and customer demand in certain industries peaked, our ERNIE agents effectively bridged this gap. For example, here is a company that should increase inquiries as a family reunited and chat on elderly parents’ health needs. But their customers – by their own customer service team, actually were away because they were on holiday. Through the ERNIE agents, we have the company effectively identify and qualify the highly relevant sales leads, enabling them to efficiently flow out and serve their customers seamlessly, even with reduced holiday staffing. Regarding your question about AI chatbots and search, we believe that we are still in the very early stage of the AI revolution, driven by the foundation models. Whether it is AI native chatbot like DeepSeek or our AI-driven products, these efforts represent different ways to explore AI potential. As the leader in China’s search market with hundreds of millions of users, we maintain agility and holistic market view by integrating the best innovations and incorporating truly innovative AI features. As we continue to pioneer AI transformations, we enhance the search experiences for our massive user base. Also, search, by its nature, is deeply rooted in language and text understanding, which aligns perfectly with the large language model capabilities, positioning us well to lead in the AI-powered search transformation. We believe search is evolving into an integrated platform that goes beyond AI chatbots. It not only provides smart answers but also guides users through their entire journey from finding answers to providing in-depth analysis to completing tasks and ultimately to delivering comprehensive services and solutions. While AI chatbots represent an important early phase, AI application development has not yet emerged to the fullest. For us, the key is to maintain this rapid and determined pace of AI transformation, focusing on discovering what users truly need and want from the next generation of search. Thank you, Lincoln.

Thank you. Your next question comes from Alex Yao from JPMorgan. Please go ahead.

Hi, management. Thank you for taking my question. So could you comment on core ads growth outlook for first quarter '25 and full year 2025? What are the macro assumptions you made underlying this outlook, as the advertising business truly bottomed out in 4Q '24 and started to recover? And lastly, what are the potential opportunities for monetizing GenAI search and what is the expected timing? Thank you.

Thank you, Alex. Let me address your question. We have observed various seamless policies being implemented in recent months, including monetary easing, fiscal stimulus, and trading policies. While we anticipate that these measures will ultimately benefit the economy, they require time to take effect. Our advertising business is strongly linked to small and medium enterprises, which are particularly affected by macroeconomic conditions, and combined with the ongoing competitive challenges, we have not yet seen improvements in Q4. Even with these short-term pressures, our initiatives to enhance search using foundation models are advancing steadily. We believe this AI transformation will enhance user experiences and create new opportunities. This quarter, we have made further strides in transforming search with AI, and we are observing positive changes in user metrics, as mentioned in our prepared remarks. We believe this will contribute to revenue growth and open new avenues for monetization in the long run. We have not yet begun to monetize our AI-generated results at scale, which constitute about 22% of total queries. Once our AI-powered search features are sufficiently refined, we will proceed with monetization. With improved user products, we see potential for future growth. Taking all these factors into account, we believe we are approaching a turning point for our advertising business. We expect our advertising operations to gradually improve, with the first half of the year performing better than Q4 and the second half showing further progress compared to the first half. Thank you, Alex.

Thank you. Your next question comes from Gary Yu from Morgan Stanley. Please go ahead.

Thank you for that opportunity. So my question is regarding AI cloud. Given the strong growth of your AI Cloud business this quarter, can we expect a continued positive trajectory going into 2025, and both in terms of revenue and also profitability? What are the main drivers behind this momentum? And additionally, could management share your outlook on the AI Cloud market in 2025? How should we approach enterprise cloud demand and what incremental opportunities does AI bring to this segment? Thank you.

Thank you, Gary, for your question. So as Robin mentioned, our AI Cloud revenue growth accelerated to 26% year-over-year in Q4, contributing to a full-year revenue growth of 17% in '24. Notably, GenAI-related revenue nearly tripled year-over-year in 2024. This growth was fueled by rising demand for ERNIE and our AI infrastructure, and scoring the market's strong recognition of our technical leadership. As a result, we’ve successfully attracted a diverse customer base and built a robust pipeline of opportunities. For AI infrastructure, we have established partnerships across diverse sectors, including Internet, Automotive, Smart Devices, Manufacturing, Energy, Finance, Utilities, and numerous AIGC start-ups. Our customer base continues to grow healthily with strong gains among both top-tier and mid-tier customers, demonstrating our expanding market share in China's cloud market. On the MaaS platform, Tianfeng, it provides comprehensive foundation models with industry-leading performance. We offer the ERNIE family of models from flagship to lightweight variants, designed to meet diverse needs. Besides ERNIE, we also provide access to a wide range of high-quality third-party foundation models, including DeepSeek V3 and R1 Models. Thanks to our full stack AI capabilities and end-to-end optimization, we can ensure optimal performance and stability for any application hosted on our platform, while maintaining a highly competitive presence. In addition to that, Tianfeng provides a full suite of tools for fine-tuning models and building AI native apps so that our customers can easily work out solutions catering for their own specific needs. In terms of the AI Cloud market, we believe it will grow rapidly in 2025. On one hand, during the recent Chinese New Year holiday, large language models became a widely discussed topic. This not only further increased public awareness of foundation models but also encouraged more people to think simply about how to leverage them to improve their own businesses. On the other hand, we are confident that the performance of foundation models will continue to improve while costs steadily decline. Surely, this will further lower the barrier for utilizing these models. As a result, we believe more enterprises will integrate foundation models into every aspect of their business operations from R&D to production and sales, which will drive explosive growth in API costs. Thereafter, we anticipate increased spending on Baidu AI Cloud, as we have observed a clear trend in the past that consumers who adopted foundation models through API costs on our Tianfeng MaaS platform also tend to increase their spending on our AI Cloud services. On the profit side, our non-GAAP operating margin continued to expand year-over-year in Q4 as we focused on high-value opportunities that align with our strategic priorities, which drives sustainable robust growth. Looking into 2025, we are confident that our AI cloud revenue growth will maintain strong momentum while continuing to generate positive operating profit. Thank you, Gary.

Your next question comes from Xiong Wei from UBS. Please go ahead.

Hi management. Good evening, thank you for taking my question. I want to ask about our margin trend. So given the near-term headwinds in core ads and the increasing mix of cloud revenue, how should we think about the core margin levels in the first quarter and also full year 2025? Is there any room to further optimize our operating efficiency? And also, are there any investment plans for the full year that we should be aware of? Thank you.

Thank you, Wei for your question. This is Jackson. So despite the near-term pressure, we remain optimistic that our strategic AI investment will deliver more sustainable impact. We stay focused on improving resilience across all aspects of our business operations and see encouraging progress across our businesses. First, for our online marketing business, we expect our advertising revenue to gradually improve, driven by our plan to monetize our AI-generated search results at scale, and also our revenue to capture growth opportunities when the macro environment improves. Secondly, for our AI Cloud business, it has already demonstrated robust growth with continued margin improvement, driven by our growing market presence and the competitive advantage in our unique self-developed four-layer AI architecture and first step AI capabilities. So we remain confident in maintaining this strong momentum going forward. Third, for our entire driving business, particularly Robotaxi, Apollo Go, we remain focused on narrowing losses with better operational efficiency and improved utilization. We are also exploring innovative operational models, including asset-light models. As you asked for the investments and optimization in 2025, we will maintain optimal resource allocation to high growth opportunities while aligning with our long-term strategy. Our investments will continue to focus on initiatives that offer both tremendous future opportunities and strong ROI potential, including further advancing ERNIE's capabilities, deepening the AI transformation of search, enhancing our AI Cloud offerings, and expanding our autonomous driving initiatives. As we move forward with these initiatives, we remain committed to enhancing operational efficiency and fostering synergies across business groups to maximize the impact of these strategic investments. Thank you.

Thank you. Your next question comes from Miranda Zhuang from Bank of America Securities. Please go ahead.

Good evening. Thank you to management for addressing my question. I'm interested in the updates regarding the Robotaxi business as we approach 2025. Can management share insights on the targets for fleet size, unit economics, and the value proposition of our Robotaxi business? Do you believe the industry is nearing an inflection point, and what are your thoughts on the competitive landscape? We are observing that China's Robotaxi competitors are utilizing ecosystem strategies with automakers and ride-hailing platforms. What is Baidu's strategy to compete and scale in this environment? Thank you.

Yes, this is Robin. We've invested in autonomous driving technology for over a decade. We have turned our big vision into reality. Through Apollo Go, we established ourselves as a leading global player in autonomous driving technology. We operate in one of the most challenging environments globally. China's traffic conditions are among the world's most complex due to its massive population, diverse road conditions, dynamic traffic scenarios, and complicated urban layouts. The price for ride-hailing in China is about one-seventh of that in the U.S. So our successful operation here demonstrates our exceptional technological and operational capabilities. We designed the RT6, our sixth-generation autonomous vehicle from the ground up. It is the most cost-effective global taxi vehicle the world has ever seen. With these strengths, we've successfully validated our business model and laid a strong foundation for further scaling and global expansion. In Q4, Apollo Go provided approximately 1.1 million rides nationwide. That's a 36% increase year-over-year. And in January, the cumulative rides provided to the public exceeded 9 million. Furthermore, as I mentioned, we've achieved 100% fully driverless operations in China, meaning that we don't have any safety drivers on the vehicles anymore. This is a new industry benchmark and it reinforces our leadership in this area. As I mentioned earlier, in November of last year, Apollo Go got the green light to start open testing in Hong Kong. This is an important step because Hong Kong is our first right-hand drive and right-hand traffic market. It shows our ability to adapt our autonomous driving technology to different traffic systems, opening doors for expansion into other markets with similar driving setups. This year will be a paramount year for our expansion. We expect to grow our fleet size and ride volumes faster than ever. As we push forward, we're also actively seeking cooperation opportunities. We have identified a variety of potential partners, including mobility service providers, local taxi companies, and third-party fleet operators. This asset-light approach will allow us to scale up efficiently while maintaining flexibility. By working with a diverse range of partners, we aim to strengthen our position in the market and bring autonomous driving to even more people. Looking at the broader market, as I mentioned in our last earnings call, since the market is still in its infancy, competition actually helps accelerate market development and fosters a more friendly pro-innovation regulatory environment. In this growing market, our mission remains clear: delivering safer, more convenient, and more comfortable mobility experiences for more users. Thank you.

Thank you. Your next question comes from Thomas Chong from Jefferies. Please go ahead.

Hi, good evening. Thanks management for taking my questions. Looking into 2025, what will be Baidu's strategic focus for business investments? Specifically, how will resources be allocated across search, autonomous driving, cloud services, and foundation models? Additionally, what is management's outlook on full year 2025 capital expenditures as well as shareholders' returns? Thank you.

Thank you, Thomas. This is Jackson. As we evaluate our capital allocation opportunities in 2025, our approach is guided by the following strategic considerations. We will continue to invest in advancing our AI capabilities as a long-term strategic priority. With that, we will further deepen the AI transformation across our product portfolio, particularly search. For AI Cloud, we aim to drive the adoption of our AI infrastructure, our MaaS platform, Tianfeng, and the ERNIE among enterprise customers, meeting their growing demand for our AI products and solutions, as well as AI Cloud services. In intelligent driving, we are focusing on scaling domestic operations, exploring innovative operational models, and expanding our international presence while ensuring disciplined ROI management and effective loss control. Regarding CapEx, two key priorities drive our decisions: strengthening our technology leadership and accelerating the adoption of our AI products and AI cloud services across different sectors. As you asked about shareholder returns, we repurchased over $1 billion since the beginning of 2024, which is significantly higher than our total buybacks in 2023. In total, we have repurchased $1.7 billion under our $5 billion purchase program, which runs through December 2025. Going forward, we plan to accelerate our buyback program as part of our ongoing efforts to return value to our shareholders for their enduring trust and support. Thank you.

Ladies and gentlemen, that is all the time we have for questions. That does conclude our conference for today. Thank you for participating. You may all disconnect.