6-K
Baidu, Inc. (BIDU)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OFFOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2024
Commission File Number: 000-51469
BAIDU, INC.
Baidu Campus
No. 10 Shangdi 10th Street
Haidian District, Beijing 100085
The People’s Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
EXPLANATORY NOTE
Baidu, Inc. (the “Company”) hereby furnishes the press release announcing its unaudited financial results for the quarter ended June 30, 2024, which is attached hereto as exhibit 99.1. Pursuant to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange, the Company hereby also furnishes the reconciliation of the material differences between its unaudited financial results for the quarter ended June 30, 2024 prepared under the U.S. Generally Accepted Accounting Principles and the International Financial Reporting Standards, which is attached hereto as exhibit 99.2.
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release — Baidu Announces Second Quarter 2024 Results |
| 99.2 | Reconciliation Between the U.S. Generally Accepted Accounting Principles and the International Financial Reporting Standards |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BAIDU, INC. | ||
|---|---|---|
| By | : | /s/ Rong Luo |
| Name | : | Rong Luo |
| Title | : | Chief Financial Officer |
Date: August 22, 2024
EX-99.1
Exhibit 99.1
Baidu Announces Second Quarter 2024 Results
BEIJING, China, Aug 22, 2024 — Baidu, Inc. (NASDAQ: BIDU and HKEX: 9888 (HKD Counter) and 89888 (RMB Counter)), (“Baidu” or the “Company”), a leading AI company with strong Internet foundation, today announced its unaudited financial results for the second quarter ended June 30, 2024.
“AI Cloud continued to accelerate in the second quarter, offsetting the ongoing macro headwinds for online marketing revenue and resulting in modestly positive topline growth for Baidu Core. Operationally, we fast-tracked the renovation of Baidu search, which we believe will drive long-term success despite the short-term impact on monetization. We also achieved new breakthroughs with Apollo Go, which now offers 100% fully driverless ride-hailing services in practically the entire Wuhan municipality, and has started scalable testing of the latest RT6 vehicles,” said Robin Li, Co-founder and CEO of Baidu. “Gradually, the transformative impact of Gen-AI and foundation models is becoming more tangible in business and everyday life. Throughout all layers of our AI technology stack and with the rapid adoption of applications built on top of ERNIE, we are scaling AI to address real-world problems and generate substantial value both for external customers and our own product portfolio.”
“As we speeded up the AI-native transformation of our products in the second quarter, we continued to optimize our operations and maintained a healthy margin,” said Rong Luo, CFO of Baidu. “For AI Cloud in particular, we expect growth to maintain a strong momentum.”
Second Quarter 2024 Financial Highlights^1^
| Baidu, Inc. | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions except per ADS, unaudited) | Q2 | Q1 | |||||||||||||||
| 2023 | 2024 | Q2 2024 | YOY | QOQ | |||||||||||||
| RMB | RMB | RMB | US | ||||||||||||||
| Total revenues | 34,056 | 31,513 | 33,931 | (0 | %) | 8 | % | ||||||||||
| Operating income | 5,210 | 5,484 | 5,944 | 14 | % | 8 | % | ||||||||||
| Operating income (non-GAAP)^2^ | 7,334 | 6,673 | 7,500 | 2 | % | 12 | % | ||||||||||
| Net income to Baidu | 5,210 | 5,448 | 5,488 | 5 | % | 1 | % | ||||||||||
| Net income to Baidu (non-GAAP)^2^ | 7,998 | 7,011 | 7,396 | (8 | %) | 5 | % | ||||||||||
| Diluted earnings per ADS | 14.17 | 14.91 | 15.01 | 6 | % | 1 | % | ||||||||||
| Diluted earnings per ADS (non-GAAP)^2^ | 22.55 | 19.91 | 21.02 | (7 | %) | 6 | % | ||||||||||
| Adjusted EBITDA^2^ | 9,116 | 8,244 | 9,147 | 0 | % | 11 | % | ||||||||||
| Adjusted EBITDA margin | 27 | % | 26 | % | 27 | % | % |
All values are in US Dollars.
| 1 | Unless otherwise noted, RMB to USD was converted at an exchange rate of RMB7.2672 as of June 28, 2024, as<br>set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Translations are provided solely for the convenience of the reader. |
|---|---|
| 2 | Non-GAAP measures are defined in the<br>Non-GAAP Financial Measures section (see also “Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures” for more details).<br> |
| --- | --- |
1
| Baidu Core | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions, unaudited) | Q2 | Q1 | |||||||||||||||
| 2023 | 2024 | Q2 2024 | YOY | QOQ | |||||||||||||
| RMB | RMB | RMB | US | ||||||||||||||
| Total revenues | 26,407 | 23,803 | 26,687 | 1 | % | 12 | % | ||||||||||
| Operating income | 4,568 | 4,538 | 5,608 | 23 | % | 24 | % | ||||||||||
| Operating income (non-GAAP)^2^ | 6,516 | 5,586 | 7,005 | 8 | % | 25 | % | ||||||||||
| Net income to Baidu Core | 5,012 | 5,150 | 5,462 | 9 | % | 6 | % | ||||||||||
| Net income to Baidu Core (non-GAAP)^2^ | 7,694 | 6,628 | 7,290 | (5 | %) | 10 | % | ||||||||||
| Adjusted EBITDA^2^ | 8,229 | 7,118 | 8,617 | 5 | % | 21 | % | ||||||||||
| Adjusted EBITDA margin | 31 | % | 30 | % | 32 | % | % |
All values are in US Dollars.
Operational Highlights
Corporate
| • | Baidu expanded the ERNIE family of models with the launch of ERNIE 4.0 Turbo in June 2024, offering superior<br>capabilities for typical use cases, and designed to run faster and at lower cost compared to ERNIE 4.0. |
|---|---|
| • | Baidu returned US$301 million to shareholders since the beginning of Q2 2024, bringing the cumulative<br>repurchase to about US$1.2 billion under the 2023 share repurchase program. |
| --- | --- |
| • | Baidu earned a position in the China edition of the S&P Global Sustainability Yearbook, in recognition of<br>its exceptional ESG performance. The selection stems from a comprehensive evaluation of 1,700 Chinese companies as part of the S&P Global 2023 Corporate Sustainability Assessment, underscoring Baidu’s sustainability practices.<br> |
| --- | --- |
AI Cloud
| • | PaddlePaddle and ERNIE developer community grew to 14.7 million in June 2024. |
|---|
Intelligent Driving
| • | Apollo Go, Baidu’s autonomous ride-hailing service, provided about 899K rides in the second quarter of<br>2024, up 26% year over year. As of July 28, 2024, the cumulative rides provided to the public by Apollo Go surpassed 7 million. |
|---|---|
| • | On June 19, Apollo Go started offering 100% fully driverless operations in practically the entire Wuhan<br>municipality, its largest operational city, marking a significant milestone. |
| --- | --- |
| • | The sixth-generation of our autonomous vehicle, the RT6, is now undergoing scalable testing.<br> |
| --- | --- |
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Mobile Ecosystem
| • | In June 2024, Baidu App’s MAUs reached 703 million, up 4% year over year. |
|---|---|
| • | Managed Page accounted for 51% of Baidu Core’s online marketing revenue in the second quarter of 2024.<br> |
| --- | --- |
Second Quarter 2024 Financial Results
Total revenues were RMB33.9 billion ($4.67 billion), which was basically flat from last year.
| • | Revenue from Baidu Core was RMB26.7 billion ($3.67 billion), increasing 1% year over year;<br>online marketing revenue was RMB19.2 billion ($2.64 billion), decreasing 2% year over year, and non-online marketing revenue was RMB7.5 billion ($1.03 billion), up 10% year over year,<br>mainly driven by AI Cloud business. |
|---|---|
| • | Revenue from iQIYI was RMB7.4 billion ($1.02 billion), decreasing 5% year over year.<br> |
| --- | --- |
Cost of revenues was RMB16.4 billion ($2.26 billion), increasing 1% year over year, primarily due to an increase in traffic acquisition costs and costs related to AI Cloud business.
Selling, general and administrative expenses were RMB5.7 billion ($784 million), decreasing 9% year over year, primarily due to a decrease in expected credit losses, channel spending and promotional marketing expenses and personnel related expenses.
Research and development expenses were RMB5.9 billion ($810 million), decreasing 8% year over year, primarily due to a decrease in personnel related expenses.
Operating income was RMB5.9 billion ($818 million). Baidu Core operating income was
RMB5.6 billion ($772 million), and Baidu Core operating margin was 21%. Non-GAAP operating incomewas RMB7.5 billion ($1.03 billion). Non-GAAP Baidu Core operating income was RMB7.0 billion ($964 million), and non-GAAP Baidu Core operatingmargin was 26%.
Total other income, net was RMB771 million ($106 million), decreasing 44% year over year, primarily due to a decrease in net foreign exchange gain and disposal gain, partially offset by the decrease in fair value loss and impairment loss from long-term investments.
Income tax expense was RMB1.1 billion ($156 million), compared to RMB1.3 billion in the same period last year.
Net income attributable to Baidu was RMB5.5 billion ($755 million), and diluted earnings per ADS was RMB15.01 ($2.07). Net income attributableto Baidu Core was RMB5.5 billion ($752 million), and net margin for Baidu Core was 20%. Non-GAAP net income attributable to Baidu was RMB7.4 billion ($1.02 billion). Non-GAAP diluted earnings per ADS was RMB21.02 ($2.89). Non-GAAP net income attributable to Baidu Core was RMB7.3 billion ($1.00 billion), and non-GAAP net margin for Baidu Core was 27%.
3
Adjusted EBITDA was RMB9.1 billion ($1.26 billion) and adjusted EBITDA margin was 27%. Adjusted EBITDA for Baidu Core was RMB8.6 billion ($1.19 billion) and adjusted EBITDA margin for Baidu Core was 32%.
As of June 30, 2024, cash, cash equivalents, restricted cash and short-term investments were RMB162.0 billion ($22.29 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB155.0 billion ($21.32 billion). Free cash flow was
RMB6.3 billion ($862 million), and free cash flow excluding iQIYI was RMB5.9 billion ($810 million).
Conference Call Information
Baidu’s management will hold an earnings conference call at 8.00 AM on Aug 22, 2024, U.S. Eastern Time (8.00 PM on Aug 22, 2024, Beijing Time).
Please register in advance of the conference call using the link provided below. It will automatically direct you to the registration page of “Baidu Inc. Q2 2024 Earnings Conference Call”. Please follow the steps to enter your registration details, then click “Register”. Upon registering, you will then be provided with the dial-in number, the passcode, and your unique access PIN. This information will also be emailed to you as a calendar invite.
For pre-registration, please click:
https://s1.c-conf.com/diamondpass/10040402-jgu7y6.html
In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), the passcode and unique access PIN) provided in the calendar invite that you have received following your pre-registration.
Additionally, a live and archived webcast of this conference call will be available at https://ir.baidu.com.
About Baidu
Founded in 2000, Baidu’s mission is to make the complicated world simpler through technology. Baidu is a leading AI company with strong Internet foundation, trading on NASDAQ under “BIDU” and HKEX under “9888”. One Baidu ADS represents eight Class A ordinary shares.
Contacts
Investors Relations, Baidu, Inc.
Tel: +86-10-5992-8888
Email: ir@baidu.com
4
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, 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 announcements made on the website of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), 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 and newsfeed 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 and newsfeed 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 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, and announcements on the website of the Hong Kong Stock Exchange. 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.
5
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 income, non-GAAP operating margin, non-GAAP net income attributable to Baidu, non-GAAP net margin, non-GAAP diluted earnings per ADS, adjusted EBITDA, adjusted EBITDA margin 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 non-cash charges or non-operating 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 income represents operating income excluding share-based compensation expenses, and amortization and impairment of intangible assets resulting from business combinations.
Non-GAAP net income attributable to Baidu represents net income attributable to Baidu excluding share-based compensation expenses, amortization and impairment of intangible assets resulting from business combinations, disposal gain, impairment of long-term investments, and fair value gain (loss) of long-term investments, adjusted for related income tax effects. Baidu’s share of equity method investments for these non-GAAP reconciling items, amortization and impairment of intangible assets not on the investees’ books, accretion of their redeemable non-controlling interests, and the gain or loss associated with the issuance of shares by the investees at a price higher or lower than the carrying value per share, adjusted for related income tax effects, are also excluded.
6
Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated by dividing non-GAAP net income attributable to Baidu, by the weighted average number of ordinary shares expressed in ADS. Adjusted EBITDA represents operating income excluding depreciation, amortization and impairment of intangible assets resulting from business combinations, and share-based compensation expenses.
For more information on non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measure.”
7
Baidu, Inc.
Condensed Consolidated Statements of Income
(In millions except for per share (or ADS) information, unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2023 | 2024 | 2024 | 2024 | 2023 | 2024 | 2024 | |||||||||||||
| RMB | RMB | RMB | US(2) | RMB | RMB | US(2) | |||||||||||||
| Revenues: | |||||||||||||||||||
| Online marketing services | 21,081 | 18,490 | 20,625 | 39,053 | 39,115 | ||||||||||||||
| Others | 12,975 | 13,023 | 13,306 | 26,147 | 26,329 | ||||||||||||||
| Total revenues | **** | 34,056 | **** | **** | 31,513 | **** | **** | 33,931 | **** | **** | **** | 65,200 | **** | **** | 65,444 | **** | **** | ||
| Costs and expenses: | |||||||||||||||||||
| Cost of revenues^(1)^ | 16,167 | 15,291 | 16,398 | 31,319 | 31,689 | ||||||||||||||
| Selling, general and administrative^(1)^ | 6,298 | 5,375 | 5,700 | 11,887 | 11,075 | ||||||||||||||
| Research and development^(1)^ | 6,381 | 5,363 | 5,889 | 11,804 | 11,252 | ||||||||||||||
| Total costs and expenses | **** | 28,846 | **** | **** | 26,029 | **** | **** | 27,987 | **** | **** | **** | 55,010 | **** | **** | 54,016 | **** | **** | ||
| Operating income | **** | 5,210 | **** | **** | 5,484 | **** | **** | 5,944 | **** | **** | **** | 10,190 | **** | **** | 11,428 | **** | **** | ||
| Other income: | |||||||||||||||||||
| Interest income | 1,948 | 2,091 | 1,993 | 3,863 | 4,084 | ||||||||||||||
| Interest expense | (817 | ) | (766 | ) | (742 | ) | ) | (1,621 | ) | (1,508 | ) | ) | |||||||
| Foreign exchange gain, net | 1,176 | 401 | 93 | 1,070 | 494 | ||||||||||||||
| Share of losses from equity method investments | (383 | ) | (205 | ) | (119 | ) | ) | (431 | ) | (324 | ) | ) | |||||||
| Others, net | (555 | ) | (275 | ) | (454 | ) | ) | 1,083 | (729 | ) | ) | ||||||||
| Total other income, net | **** | 1,369 | **** | **** | 1,246 | **** | **** | 771 | **** | **** | **** | 3,964 | **** | **** | 2,017 | **** | **** | ||
| Income before income taxes | **** | 6,579 | **** | **** | 6,730 | **** | **** | 6,715 | **** | **** | **** | 14,154 | **** | **** | 13,445 | **** | **** | ||
| Income tax expense | 1,270 | 883 | 1,131 | 2,463 | 2,014 | ||||||||||||||
| Net income | **** | 5,309 | **** | **** | 5,847 | **** | **** | 5,584 | **** | **** | **** | 11,691 | **** | **** | 11,431 | **** | **** | ||
| Net income attributable to noncontrolling interests | 99 | 399 | 96 | 656 | 495 | ||||||||||||||
| Net income attributable to Baidu | **** | 5,210 | **** | **** | 5,448 | **** | **** | 5,488 | **** | **** | **** | 11,035 | **** | **** | 10,936 | **** | **** |
All values are in US Dollars.
8
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | ||||||
| 2023 | 2024 | 2024 | 2024 | 2023 | 2024 | 2024 | ||||||
| RMB | RMB | RMB | US(2) | RMB | RMB | US(2) | ||||||
| Earnings per ADS | ||||||||||||
| (1 ADS representing 8 | ||||||||||||
| Class A ordinary shares): | ||||||||||||
| — Basic | 14.34 | 14.97 | 15.11 | 30.55 | 30.12 | |||||||
| — Diluted | 14.17 | 14.91 | 15.01 | 30.05 | 29.98 | |||||||
| Earnings per share for Class A and Class B ordinary shares: | ||||||||||||
| — Basic | 1.79 | 1.87 | 1.89 | 3.82 | 3.77 | |||||||
| — Diluted | 1.77 | 1.86 | 1.88 | 3.76 | 3.74 | |||||||
| Weighted average number of Class A and Class B ordinary shares outstanding (in<br>millions): | ||||||||||||
| — Basic | 2,804 | 2,804 | 2,796 | 2,801 | 2,800 | |||||||
| — Diluted | 2,834 | 2,816 | 2,804 | 2,836 | 2,810 | |||||||
| (1) Includes share-based compensation expenses as<br>follows: | ||||||||||||
| Cost of revenues | 194 | 108 | 146 | 292 | 254 | |||||||
| Selling, general and administrative | 446 | 417 | 385 | 909 | 802 | |||||||
| Research and development | 1,403 | 618 | 981 | 2,231 | 1,599 | |||||||
| Total share-based compensation expenses | 2,043 | 1,143 | 1,512 | 3,432 | 2,655 |
All values are in US Dollars.
| (2) | All translations from RMB to U.S. dollars are made at a rate of RMB7.2672 to US$1.00, the exchange rate in<br>effect as of June 28, 2024 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. |
|---|
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Baidu, Inc.
Condensed Consolidated Balance Sheets
(In millions, unaudited)
| December 31, | June 30, | June 30, | |||
|---|---|---|---|---|---|
| 2023 | 2024 | 2024 | |||
| RMB | RMB | US | |||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 25,231 | 43,534 | |||
| Restricted cash | 11,503 | 11,646 | |||
| Short-term investments, net | 168,670 | 106,821 | |||
| Accounts receivable, net | 10,848 | 11,112 | |||
| Amounts due from related parties | 1,424 | 1,396 | |||
| Other current assets, net | 12,579 | 12,757 | |||
| Total current assets | **** | 230,255 | **** | 187,266 | |
| Non-current assets: | |||||
| Fixed assets, net | 27,960 | 29,154 | |||
| Licensed copyrights, net | 6,967 | 6,914 | |||
| Produced content, net | 13,377 | 14,320 | |||
| Intangible assets, net | 881 | 812 | |||
| Goodwill | 22,586 | 22,586 | |||
| Long-term investments, net | 47,957 | 46,193 | |||
| Long-term time deposits and<br>held-to-maturity investments | 24,666 | 72,497 | |||
| Amounts due from related parties | 195 | 212 | |||
| Deferred tax assets, net | 2,100 | 2,342 | |||
| Operating lease<br>right-of-use assets | 10,851 | 10,919 | |||
| Other non-current assets | 18,964 | 22,312 | |||
| Total non-current assets | **** | 176,504 | **** | 228,261 | |
| Total assets | **** | 406,759 | **** | 415,527 |
All values are in US Dollars.
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| December 31, | June 30, | June 30, | |||
|---|---|---|---|---|---|
| 2023 | 2024 | 2024 | |||
| RMB | RMB | US | |||
| LIABILITIES, REDEEMABLE | |||||
| NONCONTROLLING INTERESTS AND EQUITY | |||||
| Current liabilities: | |||||
| Short-term loans | 10,257 | 12,514 | |||
| Accounts payable and accrued liabilities | 37,717 | 37,988 | |||
| Customer deposits and deferred revenue | 14,627 | 14,038 | |||
| Deferred income | 306 | 291 | |||
| Long-term loans, current portion | 2 | 29 | |||
| Convertible senior notes, current portion | 2,802 | 2,892 | |||
| Notes payable, current portion | 6,029 | 7,986 | |||
| Amounts due to related parties | 1,603 | 1,831 | |||
| Operating lease liabilities | 3,108 | 3,196 | |||
| Total current liabilities | **** | 76,451 | **** | 80,765 | |
| Non-current liabilities: | |||||
| Deferred income | 200 | 287 | |||
| Deferred revenue | 481 | 520 | |||
| Amounts due to related parties | 77 | 67 | |||
| Long-term loans | 14,223 | 14,859 | |||
| Notes payable | 34,990 | 27,860 | |||
| Convertible senior notes | 8,144 | 8,408 | |||
| Deferred tax liabilities | 2,725 | 2,940 | |||
| Operating lease liabilities | 5,040 | 5,056 | |||
| Other non-current liabilities | 1,820 | 1,827 | |||
| Total non-current liabilities | **** | 67,700 | **** | 61,824 | |
| Total liabilities | **** | 144,151 | **** | 142,589 | |
| Redeemable noncontrolling interests | **** | 9,465 | **** | 10,107 | |
| Equity | |||||
| Total Baidu shareholders’ equity | 243,626 | 252,769 | |||
| Noncontrolling interests | 9,517 | 10,062 | |||
| Total equity | **** | 253,143 | **** | 262,831 | |
| Total liabilities, redeemable noncontrolling interests, and equity | **** | 406,759 | **** | 415,527 |
All values are in US Dollars.
11
Baidu, Inc.
Selected Information
(In millions, unaudited)
| Three months ended | Three months ended | Three months ended | Three months ended | ||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 (RMB) | March 31, 2024 (RMB) | June 30, 2024 (RMB) | June 30, 2024 (US) | ||||||||||||||||||||||||||||||||||||||||||
| Baidu | Elim & | Baidu, | Baidu | Elim & | Baidu, | Baidu | Elim & | Baidu, | Baidu | Elim & | Baidu, | ||||||||||||||||||||||||||||||||||
| Core | iQIYI | adj^(2)^ | Inc. | Core | iQIYI | adj^(2)^ | Inc. | Core | iQIYI | adj^(2)^ | Inc. | Core | iQIYI | adj^(2)^ | Inc. | ||||||||||||||||||||||||||||||
| Total revenues | **** | 26,407 | **** | **** | 7,802 | **** | (153 | ) | **** | 34,056 | **** | **** | 23,803 | **** | **** | 7,927 | **** | (217 | ) | **** | 31,513 | **** | **** | 26,687 | **** | **** | 7,439 | **** | (195 | ) | **** | 33,931 | **** | **** | 1,024 | **** | (27 | ) | **** | 4,669 | |||||
| YOY | 1 | % | (5 | %) | (0 | %) | |||||||||||||||||||||||||||||||||||||||
| QOQ | 12 | % | (6 | %) | 8 | % | |||||||||||||||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenues^(1)^ | 10,553 | 5,774 | (160 | ) | 16,167 | 9,839 | 5,631 | (179 | ) | 15,291 | 10,888 | 5,678 | (168 | ) | 16,398 | 781 | (22 | ) | 2,257 | ||||||||||||||||||||||||||
| Selling, general and administrative^(1)^ | 5,344 | 979 | (25 | ) | 6,298 | 4,492 | 922 | (39 | ) | 5,375 | 4,751 | 970 | (21 | ) | 5,700 | 133 | (3 | ) | 784 | ||||||||||||||||||||||||||
| Research and development^(1)^ | 5,942 | 439 | — | 6,381 | 4,934 | 429 | — | 5,363 | 5,440 | 449 | — | 5,889 | 62 | — | 810 | ||||||||||||||||||||||||||||||
| Total costs and expenses | **** | 21,839 | **** | **** | 7,192 | **** | (185 | ) | **** | 28,846 | **** | **** | 19,265 | **** | **** | 6,982 | **** | (218 | ) | **** | 26,029 | **** | **** | 21,079 | **** | **** | 7,097 | **** | (189 | ) | **** | 27,987 | **** | **** | 976 | **** | (25 | ) | **** | 3,851 | |||||
| YOY | |||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenues | 3 | % | (2 | %) | 1 | % | |||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | (11 | %) | (1 | %) | (9 | %) | |||||||||||||||||||||||||||||||||||||||
| Research and development | (8 | %) | 2 | % | (8 | %) | |||||||||||||||||||||||||||||||||||||||
| Costs and expenses | (3 | %) | (1 | %) | (3 | %) | |||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | **** | 4,568 | **** | **** | 610 | **** | 32 | **** | 5,210 | **** | **** | 4,538 | **** | **** | 945 | **** | 1 | **** | 5,484 | **** | **** | 5,608 | **** | **** | 342 | **** | (6 | ) | **** | 5,944 | **** | **** | 48 | **** | (2 | ) | **** | 818 | |||||||
| YOY | 23 | % | (44 | %) | 14 | % | |||||||||||||||||||||||||||||||||||||||
| QOQ | 24 | % | (64 | %) | 8 | % | |||||||||||||||||||||||||||||||||||||||
| Operating margin | 17 | % | 8 | % | 15 | % | 19 | % | 12 | % | 17 | % | 21 | % | 5 | % | 18 | % | |||||||||||||||||||||||||||
| Add: total other income (loss), net | 1,603 | (234 | ) | — | 1,369 | 1,508 | (262 | ) | — | 1,246 | 1,011 | (240 | ) | — | 771 | (33 | ) | — | 106 | ||||||||||||||||||||||||||
| Less: income tax expense | 1,262 | 8 | — | 1,270 | 866 | 17 | — | 883 | 1,105 | 26 | — | 1,131 | 4 | — | 156 | ||||||||||||||||||||||||||||||
| Less: net (loss) income attributable to NCI | (103 | ) | 3 | 199 | ^(3)^ | 99 | 30 | 11 | 358 | ^(3)^ | 399 | 52 | 7 | 37 | ^(3)^ | 96 | 1 | 5 | ^(3)^ | 13 | |||||||||||||||||||||||||
| Net income (loss) attributable to Baidu | **** | 5,012 | **** | **** | 365 | **** | (167 | ) | **** | 5,210 | **** | **** | 5,150 | **** | **** | 655 | **** | (357 | ) | **** | 5,448 | **** | **** | 5,462 | **** | **** | 69 | **** | (43 | ) | **** | 5,488 | **** | **** | 10 | **** | (7 | ) | **** | 755 | |||||
| YOY | 9 | % | (81 | %) | 5 | % | |||||||||||||||||||||||||||||||||||||||
| QOQ | 6 | % | (89 | %) | 1 | % | |||||||||||||||||||||||||||||||||||||||
| Net margin | 19 | % | 5 | % | 15 | % | 22 | % | 8 | % | 17 | % | 20 | % | 1 | % | 16 | % |
All values are in US Dollars.
12
| Three months ended | Three months ended | Three months ended | Three months ended | |||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 (RMB) | March 31, 2024 (RMB) | June 30, 2024 (RMB) | June 30, 2024 (US) | |||||||||||||||||||||||||||||||||
| Baidu | Elim & | Baidu, | Baidu | Elim & | Baidu, | Baidu | Elim & | Baidu, | Baidu | Elim & | Baidu, | |||||||||||||||||||||||||
| Core | iQIYI | adj^(2)^ | Inc. | Core | iQIYI | adj^(2)^ | Inc. | Core | iQIYI | adj^(2)^ | Inc. | Core | iQIYI | adj^(2)^ | Inc. | |||||||||||||||||||||
| Non-GAAP financial measures: | ||||||||||||||||||||||||||||||||||||
| Operating income (non-GAAP) | **** | 6,516 | **** | **** | 786 | **** | **** | 7,334 | **** | **** | 5,586 | **** | **** | 1,086 | **** | **** | 6,673 | **** | **** | 7,005 | **** | **** | 501 | **** | **** | 7,500 | **** | **** | 70 | **** | 1,032 | |||||
| YOY | 8 | % | (36 | %) | 2 | % | ||||||||||||||||||||||||||||||
| QOQ | 25 | % | (54 | %) | 12 | % | ||||||||||||||||||||||||||||||
| Operating margin (non-GAAP) | 25 | % | 10 | % | 22 | % | 23 | % | 14 | % | 21 | % | 26 | % | 7 | % | 22 | % | ||||||||||||||||||
| Net income attributable to Baidu (non-GAAP) | **** | 7,694 | **** | **** | 595 | **** | **** | 7,998 | **** | **** | 6,628 | **** | **** | 844 | **** | **** | 7,011 | **** | **** | 7,290 | **** | **** | 247 | **** | **** | 7,396 | **** | **** | 34 | **** | 1,018 | |||||
| YOY | (5 | %) | (58 | %) | (8 | %) | ||||||||||||||||||||||||||||||
| QOQ | 10 | % | (71 | %) | 5 | % | ||||||||||||||||||||||||||||||
| Net margin (non-GAAP) | 29 | % | 8 | % | 23 | % | 28 | % | 11 | % | 22 | % | 27 | % | 3 | % | 22 | % | ||||||||||||||||||
| Adjusted EBITDA | **** | 8,229 | **** | **** | 855 | **** | **** | 9,116 | **** | **** | 7,118 | **** | **** | 1,125 | **** | **** | 8,244 | **** | **** | 8,617 | **** | **** | 536 | **** | **** | 9,147 | **** | **** | 75 | **** | 1,259 | |||||
| YOY | 5 | % | (37 | %) | 0 | % | ||||||||||||||||||||||||||||||
| QOQ | 21 | % | (52 | %) | 11 | % | ||||||||||||||||||||||||||||||
| Adjusted EBITDA margin | 31 | % | 11 | % | 27 | % | 30 | % | 14 | % | 26 | % | 32 | % | 7 | % | 27 | % | ||||||||||||||||||
| (1) Includes share-based<br>compensation as follows: | ||||||||||||||||||||||||||||||||||||
| Cost of revenues | 160 | 34 | 194 | 76 | 32 | 108 | 117 | 29 | 146 | 4 | 20 | |||||||||||||||||||||||||
| Selling, general and administrative | 356 | 90 | 446 | 353 | 64 | 417 | 292 | 93 | 385 | 13 | 53 | |||||||||||||||||||||||||
| Research and development | 1,358 | 45 | 1,403 | 575 | 43 | 618 | 945 | 36 | 981 | 5 | 135 | |||||||||||||||||||||||||
| Total share-based compensation | 1,874 | 169 | 2,043 | 1,004 | 139 | 1,143 | 1,354 | 158 | 1,512 | 22 | 208 |
All values are in US Dollars.
| (2) | Relates to intersegment eliminations and adjustments |
|---|---|
| (3) | Relates to the net income attributable to iQIYI noncontrolling interests |
| --- | --- |
13
Baidu, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions,unaudited)
| Three months ended | Three months ended | Three months ended | Three months ended | ||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 (RMB) | March 31, 2024 (RMB) | June 30, 2024 (RMB) | June 30, 2024 (US) | ||||||||||||||||||||||||||||||||
| Baidu | Baidu | Baidu | Baidu | ||||||||||||||||||||||||||||||||
| excl. | Baidu, | excl. | Baidu, | excl. | Baidu, | excl. | Baidu, | ||||||||||||||||||||||||||||
| iQIYI | iQIYI | Inc. | iQIYI | iQIYI | Inc. | iQIYI | iQIYI | Inc. | iQIYI | iQIYI | Inc. | ||||||||||||||||||||||||
| Net cash provided by operating activities | **** | 9,746 | **** | **** | 886 | **** | **** | 10,632 | **** | **** | 5,284 | **** | **** | 936 | **** | **** | 6,220 | **** | **** | 7,970 | **** | **** | 409 | **** | **** | 8,379 | **** | **** | **** | 56 | **** | **** | 1,153 | **** | |
| Net cash provided by (used in) investing activities | 7,309 | (421 | ) | 6,888 | (2,893 | ) | (223 | ) | (3,116 | ) | 13,824 | 337 | 14,161 | 46 | 1,949 | ||||||||||||||||||||
| Net cash provided by (used in) financing activities | 1,908 | (1,176 | ) | 732 | 2,126 | 261 | 2,387 | (9,946 | ) | 869 | (9,077 | ) | ) | 120 | (1,249 | ) | |||||||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 496 | 128 | 624 | 154 | 15 | 169 | 66 | 22 | 88 | 3 | 12 | ||||||||||||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | **** | 19,459 | **** | **** | (583 | ) | **** | 18,876 | **** | **** | 4,671 | **** | **** | 989 | **** | **** | 5,660 | **** | **** | 11,914 | **** | **** | 1,637 | **** | **** | 13,551 | **** | **** | **** | 225 | **** | **** | 1,865 | **** | |
| Cash, cash equivalents and restricted cash | |||||||||||||||||||||||||||||||||||
| At beginning of period | 30,355 | 5,665 | 36,020 | 32,293 | 5,281 | 37,574 | 36,964 | 6,270 | 43,234 | 863 | 5,949 | ||||||||||||||||||||||||
| At end of period | 49,814 | 5,082 | 54,896 | 36,964 | 6,270 | 43,234 | 48,878 | 7,907 | 56,785 | 1,088 | 7,814 | ||||||||||||||||||||||||
| Net cash provided by operating activities | **** | 9,746 | **** | **** | 886 | **** | **** | 10,632 | **** | **** | 5,284 | **** | **** | 936 | **** | **** | 6,220 | **** | **** | 7,970 | **** | **** | 409 | **** | **** | 8,379 | **** | **** | **** | 56 | **** | **** | 1,153 | **** | |
| Less: Capital expenditures | (2,693 | ) | (13 | ) | (2,706 | ) | (2,016 | ) | (22 | ) | (2,038 | ) | (2,090 | ) | (28 | ) | (2,118 | ) | ) | (4 | ) | (291 | ) | ||||||||||||
| Free cash flow | **** | 7,053 | **** | **** | 873 | **** | **** | 7,926 | **** | **** | 3,268 | **** | **** | 914 | **** | **** | 4,182 | **** | **** | 5,880 | **** | **** | 381 | **** | **** | 6,261 | **** | **** | **** | 52 | **** | **** | 862 | **** |
All values are in US Dollars.
Note: Baidu excl. iQIYI represents Baidu, Inc. minus iQIYI’s consolidated cash flows.
14
Baidu, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
(In millions except for per ADS information, unaudited)
| Three months ended | Three months ended | Three months ended | Three months ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 (RMB) | March 31, 2024 (RMB) | June 30, 2024 (RMB) | June 30, 2024 (US) | ||||||||||||||||||||||||||||||
| Baidu | Baidu, | Baidu | Baidu, | Baidu | Baidu, | Baidu | Baidu, | ||||||||||||||||||||||||||
| Core | iQIYI | Inc. | Core | iQIYI | Inc. | Core | iQIYI | Inc. | Core | iQIYI | Inc. | ||||||||||||||||||||||
| Operating income | **** | 4,568 | **** | **** | 610 | **** | **** | 5,210 | **** | **** | 4,538 | **** | **** | 945 | **** | **** | 5,484 | **** | **** | 5,608 | **** | **** | 342 | **** | 5,944 | **** | **** | **** | 48 | **** | 818 | **** | |
| Add: Share-based compensation expenses | 1,874 | 169 | 2,043 | 1,004 | 139 | 1,143 | 1,354 | 158 | 1,512 | 22 | 208 | ||||||||||||||||||||||
| Add: Amortization and impairment of intangible<br>assets^(1)^ | 74 | 7 | 81 | 44 | 2 | 46 | 43 | 1 | 44 | — | 6 | ||||||||||||||||||||||
| Operating income (non-GAAP) | **** | 6,516 | **** | **** | 786 | **** | **** | 7,334 | **** | **** | 5,586 | **** | **** | 1,086 | **** | **** | 6,673 | **** | **** | 7,005 | **** | **** | 501 | **** | 7,500 | **** | **** | **** | 70 | **** | 1,032 | **** | |
| Add: Depreciation of fixed assets | 1,713 | 69 | 1,782 | 1,532 | 39 | 1,571 | 1,612 | 35 | 1,647 | 5 | 227 | ||||||||||||||||||||||
| Adjusted EBITDA | **** | 8,229 | **** | **** | 855 | **** | **** | 9,116 | **** | **** | 7,118 | **** | **** | 1,125 | **** | **** | 8,244 | **** | **** | 8,617 | **** | **** | 536 | **** | 9,147 | **** | **** | **** | 75 | **** | 1,259 | **** | |
| Net income attributable to Baidu | **** | 5,012 | **** | **** | 365 | **** | **** | 5,210 | **** | **** | 5,150 | **** | **** | 655 | **** | **** | 5,448 | **** | **** | 5,462 | **** | **** | 69 | **** | 5,488 | **** | **** | **** | 10 | **** | 755 | **** | |
| Add: Share-based compensation expenses | 1,872 | 169 | 1,949 | 1,003 | 139 | 1,066 | 1,353 | 158 | 1,425 | 22 | 196 | ||||||||||||||||||||||
| Add: Amortization and impairment of intangible<br>assets^(1)^ | 61 | 7 | 65 | 42 | 2 | 43 | 41 | 1 | 41 | — | 6 | ||||||||||||||||||||||
| Add: Disposal (gain) | (919 | ) | (89 | ) | (959 | ) | (458 | ) | — | (458 | ) | (30 | ) | — | (30 | ) | ) | — | (4 | ) | |||||||||||||
| Add: Impairment of long-term investments | 270 | 155 | 340 | 36 | 71 | 68 | 26 | 17 | 34 | 2 | 5 | ||||||||||||||||||||||
| Add: Fair value loss (gain) of long-term investments | 1,239 | (4 | ) | 1,237 | 725 | (23 | ) | 714 | 531 | 2 | 531 | — | 73 | ||||||||||||||||||||
| Add: Reconciling items on equity method<br>investments^(2)^ | 296 | (9 | ) | 292 | 280 | — | 280 | 83 | — | 83 | — | 11 | |||||||||||||||||||||
| Add: Tax effects on non-GAAP adjustments^(3)^ | (137 | ) | 1 | (136 | ) | (150 | ) | — | (150 | ) | (176 | ) | — | (176 | ) | ) | — | (24 | ) | ||||||||||||||
| Net income attributable to Baidu(non-GAAP) | **** | 7,694 | **** | **** | 595 | **** | **** | 7,998 | **** | **** | 6,628 | **** | **** | 844 | **** | **** | 7,011 | **** | **** | 7,290 | **** | **** | 247 | **** | 7,396 | **** | **** | **** | 34 | **** | 1,018 | **** |
All values are in US Dollars.
15
| Three months ended | Three months ended | Three months ended | Three months ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 (RMB) | March 31, 2024 (RMB) | June 30, 2024 (RMB) | June 30, 2024 (US) | ||||||||||||
| Baidu | Baidu, | Baidu | Baidu, | Baidu | Baidu, | Baidu | Baidu, | ||||||||
| Core | iQIYI | Inc. | Core | iQIYI | Inc. | Core | iQIYI | Inc. | Core | Inc. | |||||
| Diluted earnings per ADS | **** | 14.17 | **** | 14.91 | **** | 15.01 | **** | 2.07 | |||||||
| Add: Accretion of the redeemable noncontrolling interests | 0.50 | 0.55 | 0.57 | 0.08 | |||||||||||
| Add: Non-GAAP adjustments to earnings per ADS | 7.88 | 4.45 | 5.44 | 0.74 | |||||||||||
| Diluted earnings per ADS (non-GAAP) | **** | 22.55 | **** | 19.91 | **** | 21.02 | **** | 2.89 |
All values are in US Dollars.
| (1) | This represents amortization and impairment of intangible assets resulting from business combinations.<br> |
|---|---|
| (2) | This represents Baidu’s share of equity method investments for other<br>non-GAAP reconciling items, amortization and impairment of intangible assets not on the investee’s books, accretion of their redeemable noncontrolling interests, and the gain or loss associated with the<br>issuance of shares by the investees at a price higher or lower than the carrying value per share. |
| --- | --- |
| (3) | This represents tax impact of all non-GAAP adjustments.<br> |
| --- | --- |
16
EX-99.2
Exhibit 99.2
Reconciliation between U.S. GAAP and International Financial Reporting Standards
Ernst & Young was engaged by the Company to conduct limited assurance engagement in accordance with International Standards on Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” (“ISAE 3000 (Revised)”) issued by the International Federation of Accountants (“IFAC”) on the ‘Reconciliation between U.S. GAAP and International Financial Reporting Standards’ as set out on pages 20 to 25 of the 2024 Second Quarter Results (together, the “GAAP Difference Reconciliation”).
Ernst & Young’s engagement did not involve independent examination of any of the underlying financial information. The work carried out in accordance with ISAE 3000 (Revised) is different in scope from an audit or a review conducted in accordance with International Standards on Auditing or International Standards on Review Engagements issued by the IFAC and consequently, Ernst & Young did not express an audit opinion nor a review conclusion on the GAAP Difference Reconciliation. Ernst & Young’s engagement was intended solely for the use of the Directors in connection with the above purpose for this 2024 Second Quarter Results and may not be suitable for another purpose.
The procedures performed by Ernst & Young were based on their professional judgment, having regard to their understanding of the management’s process on preparing the GAAP Difference Reconciliation, nature, business performance and financial information of the Company and its subsidiaries (“the Group”). Given the circumstances of the engagement, the procedures performed included:
| (i) | Comparing the relevant financial information in the columns “Amounts as reported under U.S. GAAP” as<br>disclosed in the GAAP Difference Reconciliation with the respective line items in the Group’s unaudited interim condensed consolidated statement of income for the six months ended June 30, 2024 and the unaudited condensed consolidated<br>balance sheet as at June 30, 2024 (the “Interim Financial Statements”) prepared in accordance with the accounting principles generally accepted in the United States of America (the “U.S. GAAP”), as appropriate;<br> |
|---|---|
| (ii) | Evaluating the assessment made by the board of directors in identifying the differences between the accounting<br>policies in accordance with the U.S. GAAP and the International Financial Reporting Standards (the “IFRSs”), and the evidence supporting the adjustments made in arriving at the “Amounts under IFRSs” as disclosed in the GAAP<br>Difference Reconciliation; and |
| --- | --- |
| (iii) | Checking the arithmetic accuracy of the computation of the Group’s financial information in the columns<br>“Amounts under IFRSs” as disclosed in the GAAP Difference Reconciliation. |
| --- | --- |
The procedures performed by Ernst & Young in this limited assurance engagement vary in nature and timing from, and are less in extent than for a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. Accordingly, Ernst & Young do not express a reasonable assurance opinion.
1
Based on the procedures performed and evidence obtained, Ernst & Young has concluded that nothing has come to their attention that causes them to believe:
| (i) | the amounts in the columns “Amounts as reported under U.S. GAAP” as disclosed in the GAAP Difference<br>Reconciliation for the six months ended June 30, 2024 are not, in all material respects, in agreement with the respective line items in the Interim Financial Statements prepared in accordance with the U.S. GAAP; |
|---|---|
| (ii) | the IFRSs adjustments as disclosed in the GAAP Difference Reconciliation, do not reflect, in all material<br>respects, the different accounting treatments according to the Group’s accounting policies in accordance with the U.S. GAAP and the IFRSs of the relevant period; and |
| --- | --- |
| (iii) | the computation of the amounts in the columns “Amounts under IFRSs” as disclosed in the GAAP<br>Difference Reconciliation are not arithmetically accurate. |
| --- | --- |
2
| Reconciliation of Condensed Consolidated Statements of Income (Extract) | Amounts as<br><br><br>reported<br> <br>under U.S.<br><br><br>GAAP | For the six months ended June 30, 2023 | Amountsunder IFRSs | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| IFRS adjustments | |||||||||||||||||||||||||||||||||
| Investmentsin debtsecurities | Investmentsmeasuredat fair value | Equitymethodinvestments | Operatingleases | Redeemablepreferredshares | Share-basedcompensation | Convertiblesenior notes | |||||||||||||||||||||||||||
| (Note (i)) | (Note (ii)) | (Note (iii)) | (Note (iv)) | (Note (v)) | (Note (vi)) | (Note (vii)) | |||||||||||||||||||||||||||
| (RMB in millions) | |||||||||||||||||||||||||||||||||
| Cost of revenues | 31,319 | — | — | — | (63 | ) | — | (87 | ) | — | 31,169 | ||||||||||||||||||||||
| Selling, general and administrative | 11,887 | — | — | — | (46 | ) | — | (50 | ) | — | 11,791 | ||||||||||||||||||||||
| Research and development | 11,804 | — | — | — | (25 | ) | — | (423 | ) | — | 11,356 | ||||||||||||||||||||||
| Other income (loss): | |||||||||||||||||||||||||||||||||
| - Interest income | 3,863 | (950 | ) | — | — | — | — | — | — | 2,913 | |||||||||||||||||||||||
| - Interest expense | (1,621 | ) | — | — | — | (208 | ) | — | — | 470 | (1,359 | ) | |||||||||||||||||||||
| - Others, net / Share of losses from equity method investments | 652 | 1,185 | 239 | (873 | ) | (368 | ) | — | (5,067 | ) | (4,232 | ) | |||||||||||||||||||||
| Income before income taxes | 14,154 | 235 | 239 | (873 | ) | (74 | ) | (368 | ) | 560 | (4,597 | ) | 9,276 | ||||||||||||||||||||
| Income taxes | 2,463 | 40 | 19 | — | (48 | ) | 15 | 15 | — | 2,504 | |||||||||||||||||||||||
| Net income | 11,691 | 195 | 220 | (873 | ) | (26 | ) | (383 | ) | 545 | (4,597 | ) | 6,772 | ||||||||||||||||||||
| Less: net income (loss) attributable to noncontrolling interests | 656 | — | 36 | 28 | 3 | — | 49 | (2,509 | ) | (1,737 | ) | ||||||||||||||||||||||
| Net income attributable to Baidu, Inc. | 11,035 | 195 | 184 | (901 | ) | (29 | ) | (383 | ) | 496 | (2,088 | ) | 8,509 |
3
| Reconciliation of Condensed Consolidated Statements of Income (Extract) | Amounts as<br><br><br>reported<br> <br>under U.S.<br><br><br>GAAP | For the six months ended June 30, 2024 | Amounts underIFRSs | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| IFRS adjustments | |||||||||||||||||||||||||||||||||
| Investments indebt securities | Investmentsmeasured atfair value | Equitymethodinvestments | Operatingleases | Redeemablepreferredshares | Share-basedcompensation | Convertiblesenior notes | |||||||||||||||||||||||||||
| (Note (i)) | (Note (ii)) | (Note (iii)) | (Note (iv)) | (Note (v)) | (Note (vi)) | (Note (vii)) | |||||||||||||||||||||||||||
| (RMB in millions) | |||||||||||||||||||||||||||||||||
| Cost of revenues | 31,689 | — | — | — | (139 | ) | — | (24 | ) | — | 31,526 | ||||||||||||||||||||||
| Selling, general and administrative | 11,075 | — | — | — | (5 | ) | — | (92 | ) | — | 10,978 | ||||||||||||||||||||||
| Research and development | 11,252 | — | — | — | (44 | ) | — | (202 | ) | — | 11,006 | ||||||||||||||||||||||
| Other income (loss): | |||||||||||||||||||||||||||||||||
| - Interest income | 4,084 | (1,245 | ) | — | — | — | — | — | — | 2,839 | |||||||||||||||||||||||
| - Interest expense | (1,508 | ) | — | — | — | (158 | ) | — | — | 461 | (1,205 | ) | |||||||||||||||||||||
| - Others, net / Share of (losses) income from equity method investments | (1,053 | ) | 1,110 | (286 | ) | 3,087 | — | 475 | — | 217 | 3,550 | ||||||||||||||||||||||
| Income before income taxes | 13,445 | (135 | ) | (286 | ) | 3,087 | 30 | 475 | 318 | 678 | 17,612 | ||||||||||||||||||||||
| Income taxes | 2,014 | (11 | ) | (102 | ) | (5 | ) | 8 | (45 | ) | — | 1,859 | |||||||||||||||||||||
| Net income | 11,431 | (124 | ) | (184 | ) | 3,092 | 22 | 520 | 318 | 678 | 15,753 | ||||||||||||||||||||||
| Less: net income attributable to noncontrolling interests | 495 | — | (94 | ) | — | (2 | ) | 1 | 16 | 371 | 787 | ||||||||||||||||||||||
| Net income attributable to Baidu, Inc. | 10,936 | (124 | ) | (90 | ) | 3,092 | 24 | 519 | 302 | 307 | 14,966 |
4
| Reconciliation of Consolidated Balance Sheets (Extract) | Amounts as<br><br><br>reported<br> <br>under U.S.<br><br><br>GAAP | As of December 31, 2023 | Amounts underIFRSs | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| IFRS adjustments | ||||||||||||||||||||||||||||||
| Investmentsin debtsecurities | Investmentsmeasured atfair value | Equitymethodinvestments | Operatingleases | Redeemablepreferredshares | Share-Basedcompensation | Convertiblesenior notes | ||||||||||||||||||||||||
| (Note (i)) | (Note (ii)) | (Note (iii)) | (Note (iv)) | (Note (v)) | (Note (vi)) | (Note (vii)) | ||||||||||||||||||||||||
| (RMB in millions) | ||||||||||||||||||||||||||||||
| Short-term investments, net | 168,670 | 204 | — | — | — | — | — | — | 168,874 | |||||||||||||||||||||
| Long-term investments, net | 47,957 | — | 725 | (1,678 | ) | — | — | — | — | 47,004 | ||||||||||||||||||||
| Long-term time deposits and<br>held-to-maturity investments | 24,666 | (44 | ) | — | — | — | — | — | — | 24,622 | ||||||||||||||||||||
| Operating lease<br>right-of-use assets | 10,851 | — | — | — | (100 | ) | — | — | — | 10,751 | ||||||||||||||||||||
| Deferred tax assets, net | 2,100 | — | — | — | 7 | — | 51 | — | 2,158 | |||||||||||||||||||||
| Total assets | 406,759 | 160 | 725 | (1,678 | ) | (93 | ) | — | 51 | — | 405,924 | |||||||||||||||||||
| Convertible senior notes, current portion | 2,802 | — | — | — | — | — | — | 5,060 | 7,862 | |||||||||||||||||||||
| Convertible senior notes, non-current portion | 8,144 | — | — | — | — | — | — | (4,418 | ) | 3,726 | ||||||||||||||||||||
| Redeemable preferred shares | — | — | — | — | — | 9,110 | — | — | 9,110 | |||||||||||||||||||||
| Deferred tax liabilities | 2,725 | 42 | 44 | (8 | ) | — | 71 | — | — | 2,874 | ||||||||||||||||||||
| Total liabilities | 144,151 | 42 | 44 | (8 | ) | — | 9,181 | — | 642 | 154,052 | ||||||||||||||||||||
| Redeemable noncontrolling interests | 9,465 | — | — | — | — | (9,465 | ) | — | — | — | ||||||||||||||||||||
| Total Baidu, Inc. shareholders’ equity | 243,626 | 118 | 400 | (1,670 | ) | (62 | ) | 101 | 51 | (291 | ) | 242,273 | ||||||||||||||||||
| Noncontrolling interests | 9,517 | — | 281 | — | (31 | ) | 183 | — | (351 | ) | 9,599 | |||||||||||||||||||
| Total equity | 253,143 | 118 | 681 | (1,670 | ) | (93 | ) | 284 | 51 | (642 | ) | 251,872 |
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| Reconciliation of Consolidated Balance Sheets (Extract) | Amounts as<br><br><br>reported<br> <br>under U.S.<br><br><br>GAAP | As of June 30, 2024 | Amountsunder IFRSs | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| IFRS adjustments | |||||||||||||||||||||||||||||||
| Investmentsin debtsecurities | Investmentsmeasuredat fair value | Equitymethodinvestments | Operatingleases | Redeemablepreferred shares | Share-Basedcompensation | Convertiblesenior notes | |||||||||||||||||||||||||
| (Note (i)) | (Note (ii)) | (Note (iii)) | (Note (iv)) | (Note (v)) | (Note (vi)) | (Note (vii)) | |||||||||||||||||||||||||
| (RMB in millions) | |||||||||||||||||||||||||||||||
| Short-term investments, net | 106,821 | (55 | ) | — | — | — | — | — | — | 106,766 | |||||||||||||||||||||
| Long-term investments, net | 46,193 | — | 447 | 1,544 | — | — | — | — | 48,184 | ||||||||||||||||||||||
| Long-term time deposits and<br>held-to-maturity investments | 72,497 | 77 | — | — | — | — | — | — | 72,574 | ||||||||||||||||||||||
| Operating lease<br>right-of-use assets | 10,919 | — | — | — | (71 | ) | — | — | — | 10,848 | |||||||||||||||||||||
| Deferred tax assets, net | 2,342 | — | — | — | (1 | ) | — | 51 | — | 2,392 | |||||||||||||||||||||
| Total assets | 415,527 | 22 | 447 | 1,544 | (72 | ) | — | 51 | — | 417,519 | |||||||||||||||||||||
| Convertible senior notes, current portion | 2,892 | — | — | — | — | — | — | 4,456 | 7,348 | ||||||||||||||||||||||
| Convertible senior notes, non-current portion | 8,408 | — | — | — | — | — | — | (4,481 | ) | 3,927 | |||||||||||||||||||||
| Redeemable preferred shares | — | — | — | — | — | 8,890 | — | — | 8,890 | ||||||||||||||||||||||
| Deferred tax liabilities | 2,940 | 31 | (58 | ) | (8 | ) | — | 4 | — | — | 2,909 | ||||||||||||||||||||
| Total liabilities | 142,589 | 31 | (58 | ) | (8 | ) | — | 8,894 | — | (25 | ) | 151,423 | |||||||||||||||||||
| Redeemable noncontrolling interests | 10,107 | — | — | — | (10,107 | ) | — | — | |||||||||||||||||||||||
| Total Baidu, Inc. shareholders’ equity | 252,769 | (9 | ) | 292 | 1,552 | (39 | ) | 1,028 | 51 | 11 | 255,655 | ||||||||||||||||||||
| Noncontrolling interests | 10,062 | — | 213 | — | (33 | ) | 185 | — | 14 | 10,441 | |||||||||||||||||||||
| Total equity | 262,831 | (9 | ) | 505 | 1,552 | (72 | ) | 1,213 | 51 | 25 | 266,096 |
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Notes:
(i) Investments in debt securities
Under U.S. GAAP, the classification and measurement of debt securities are based on the entity’s investment intent. Debt securities that the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity (HTM) securities and stated at amortized cost less allowance for credit losses. Debt securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and measured at fair value through profit or loss. Debt securities that are not classified as trading or as HTM are classified as available-for-sale (AFS) securities and measured at fair value with unrealized gains and losses recorded in other comprehensive income (loss).
Under IFRSs, the classification and measurement of debt instruments, including debt securities, depends on the instrument’s contractual cash flow (CCF) characteristics and the business model under which they are managed. The assessment of the CCF determines whether the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Debt securities are measured at amortized cost if they pass the CCF characteristics test and are held with the objective of collecting CCF. Debt securities are measured at fair value through other comprehensive income (loss) if they pass the CCF characteristics test and are held with the objective of both collecting CCF and selling financial assets. Debt securities that are not measured at amortized cost or fair value through other comprehensive income (loss) is measured at fair value through profit or loss. Therefore, adjustments were made to the debt securities that should be classified as fair value through profit or loss because they did not meet CCF under IFRSs.
(ii) Investments measured at fair value
Under U.S. GAAP, for equity securities without readily determinable fair value and do not qualify for the net asset value per share practical expedient, the Group elects to use the measurement alternative to measure these investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any.
Available-for-sale debt investments are convertible debt instruments and investments in preferred shares that are currently redeemable at the Group’s option. Under U.S. GAAP, these available-for-sale debt investments are measured at fair value. Interest income is recognized in earnings. All other changes in the carrying amount of these debt investments are recognized in other comprehensive income (loss).
Under IFRSs, these investments were classified as financial assets at fair value through profit or loss and measured at fair value with changes in fair value recognized through profit or loss.
(iii) Equity method investments
The Group as the investor recorded its share of earnings or losses from its equity method investees in accordance with U.S. GAAP. Under IFRS, the accounting policies of the equity method investees must be the same as those of the investor. Therefore, adjustments were made to the Group’s share of earnings or losses of the investees, from U.S. GAAP to IFRSs, for the IFRS reconciliation.
(iv) Operating leases
Under U.S. GAAP, at lease commencement date, the Group classifies a lease as a finance lease or an operating lease. For operating leases, the lease liability is based on the present value of the remaining lease payments using the discount rate determined at lease commencement date, while the right-of-use asset is remeasured at the amount of the lease liability, adjusted for the remaining balance of any lease incentives received cumulative prepaid or accrued rents, unamortized initial direct costs and any impairment. This treatment under US GAAP generally results in expenses being incurred on a straight- line basis over the lease term.
Under IFRSs, all leases are accounted for similar to finance leases under U.S. GAAP where right-of-use assets are generally depreciated on a straight-line basis while lease liabilities are measured under the effective interest method, which results in higher expenses at the beginning of the lease term and lower expenses towards the end of the lease term.
(v) Redeemable preferred shares
Under U.S. GAAP, the Group classified the redeemable preferred shares in redeemable noncontrolling interests (mezzanine-equity), in the consolidated balance sheets, initially recorded at fair value, net of issuance costs. The Group elects to use the effective interest method to account for the changes of redemption value over the period from the date of issuance to the earliest redemption date of the preferred shares.
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Under IFRSs, these investments were classified as financial liabilities at fair value through profit or loss and measured at fair value with changes in fair value recognized through profit or loss. The amounts of changes in fair value of the redeemable preferred shares that were attributed to changes in credit risk of the redeemable preferred shares were recognized in other comprehensive income (loss).
(vi) Share-based compensation
Under U.S. GAAP, the Group elects to recognize share-based compensation using the straight-line method for all share-based awards issued with no performance obligations. Under U.S. GAAP, the Group elects to determine the total fair value of the share options by estimating the value of the option subject to graded vesting as a single award using an average expected life.
Under IFRSs, the accelerated method is required to recognize compensation expense for all employee equity awards granted with graded vesting. Under IFRSs, the total fair value of the share options is required to be determined by estimating the value of each vesting tranche separately using a separate expected life.
(vii) Convertible senior notes
Under U.S. GAAP, the convertible debts are measured at amortized cost, with any difference between the initial carrying value and the repayment amount recognized as interest expenses using the effective interest method over the period from the issuance date to the maturity date.
Under IFRSs, the convertible debts were designated as at fair value through profit or loss. The convertible debts were initially recognized at their fair value. Subsequent to initial recognition, changes in fair value of the convertible debts were generally recognized in the profit or loss, except for the portion of change in fair value attributable to changes in credit risk of the convertible debts, which is recognized in other comprehensive income (loss).
Under U.S. GAAP, the classification of the convertible debts as current or non-current is not affected by the holder’s option to convert the convertible debts into an equity instrument. Under the amendments to IAS 1 in 2024, the convertible debts are classified as current if the holder has an option to convert the host liability into the Group’s own equity instruments at any time before maturity, as the Group does not have the right to defer settlement for at least twelve months from the reporting date. The Group applied the amendments retrospectively as required by the amendments to IAS 1.
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