Baidu Group-SW (9888.HK) Q2 financial report has been released before the market on August 22, 2023 (Eastern US). In the second quarter, the overall revenue of Baidu Group reached 34.1 billion yuan, a year-on-year increase of 15%; the net profit attributable to Baidu (non- GAAP) reached 8 billion yuan, a year-on-year increase of 44%. Both revenue and profit achieved substantial growth, exceeding market expectations. Among them, Baidu's core revenue was RMB 26.4 billion, a year-on-year increase of 14%. Core online marketing revenue was RMB 19.6 billion, a year-on-year increase of 15%. Non-online marketing revenue was RMB 6.8 billion, a year-over-year increase of 12%. iQiyi’s revenue was RMB 7.8 billion, a year-on-year increase of 17%. Baidu's core operating profit was RMB 4.6 billion, and Baidu's core operating profit margin was 17%.
Judging from the published data, in the second quarter, while Baidu continued to grow strongly in its traditional business segments, it also achieved breakthroughs in varying degrees in new business segments such as smart driving and large-scale models. In addition, Baidu continued to practice pressure-style and marathon-style R&D investment. The core R&D expenses for this quarter were RMB 6.4 billion, a year-on-year increase of 1%, mainly due to the increase in server depreciation expenses and cloud-related expenses used to support Wenxinyiyan research investment. .
1. In 2023Q2, advertising continues to recover, and the core position of online marketing is stable and seeking changes
From the financial report, we can see that among the "three major growth engines" that promote Baidu's continuous efforts, mobile ecology, intelligent cloud, and technology-leading businesses (including autonomous driving business represented by Apollo, smart assistants represented by Xiaodu, etc.) , the mobile ecological business with the advertising business as the core is still the most core source of growth for Baidu at present. Although no exact data has been released, of Baidu's core revenue of 26.4 billion, online marketing revenue is 19.6 billion, and hosting page revenue accounts for 2023. In the second quarter of 2019, Baidu's core business online marketing revenue accounted for 52%.
Benefiting from the economic recovery after the epidemic and the recovery of the advertising market, residents' travel and consumption gradually returned to normal, and the macro demand in the advertising market of related offline industries rebounded. For this reason, as Baidu's 23Q1 advertising revenue has returned to positive growth, the 23Q2 growth rate is gradually being expanded.
According to the financial report, the monthly active users of Baidu APP will reach 677 million in June 2023, an increase of 8% year-on-year. Obviously, since 2023, Baidu's mobile ecology is entering the fast lane of growth, and its status as Baidu's "basic market" is still unbreakable, and it is shifting towards a diversified monetization model. With the continuous increase and improvement of user scale, scene coverage, industry and demand segmentation, based on multiple capabilities such as data, products, and technologies, Baidu will surely complete "qualitative changes" and develop into a new growth engine that fully ignites brand vitality.
2. The integration of cloud and intelligence continues to exert its strength, and the dual drive of intelligent cloud and intelligent driving goes hand in hand
According to the just-released 23Q2 financial report data, it can be seen that in the second quarter of Baidu's core revenue, non-online marketing revenue was RMB 6.8 billion, a year-on-year increase of 12%. This also means that in terms of non-online marketing, Baidu's "integration of cloud and intelligence" strategy continues to exert its strength, and businesses such as smart cloud and smart driving still maintain a profitable growth trend.
In the field of intelligent cloud , although Baidu has to face a lot of opponents, overall the results are still outstanding. According to the "IDC China AI Public Cloud Service Market Share, 2022" report released by IDC, Baidu Smart Cloud has the largest market share, with a growth rate of 69.7%. This is the fourth consecutive year and the eighth time that Baidu Smart Cloud has ranked first, with a market share of nearly 18%, which is expected to continue to improve.
** With the closer layout and integration of cloud + AI, the high-quality development of Baidu Smart Cloud may enter a state of acceleration. **On the one hand, due to Baidu's early industrial layout in hydropower, manufacturing, government affairs, transportation, finance and other industries, it has accumulated high-quality user groups and position advantages, and now it has accumulated a lot; on the other hand, Baidu Smart Cloud through its AI large model And AICG solutions are actively exploring opportunities and are full of energy. In March 2023, Baidu Smart Cloud sales leads increased by 400% year-on-year. By 23Q2, Baidu Smart Cloud has continued its B-end business, and signed cooperation agreements with enterprises in various fields such as information technology, transportation, education, finance, automobile manufacturing, and media.
In the field of intelligent driving , "Carrot Run" has supplied 660,000 autonomous driving orders in 23Q1, a year-on-year increase of 236% and a quarter-on-quarter increase of 18%. The total order volume exceeds 2 million, and it is currently the world's largest autonomous driving travel service business. In recent months, Baidu's smart driving business has received favorable policies many times:
On June 17, Baidu's "Carrot Run" received the first batch of notices issued by Pingshan District, Shenzhen City for the unmanned commercialization of intelligent connected vehicles, and can carry out L4 unmanned driving commercialization charging operations in Pingshan District, Shenzhen
. ;On June 21
, Xin Guobin, Vice Minister of the Ministry of Industry and Information Technology, stated at the regular policy briefing of the State Council that the member units of the inter-ministerial coordination mechanism for the development of the new energy vehicle industry will focus on deepening testing and demonstration applications, and launching pilot projects for the access and on-road traffic of intelligent networked vehicles , organize city-level "vehicle-road-cloud integration" demonstration applications, and support the
commercial application of L3 and higher-level autonomous driving functions;On July 8
, Baidu Zhixing obtained the first batch of road test licenses for unmanned intelligent networked vehicles issued by Shanghai Pudong New Area. Car road test.
According to the financial report, in the second quarter of 2023, Baidu's self-driving service Carrot Kuaipao supplied approximately 714,000 orders for self-driving cars, a year-on-year increase of 149%. As of June 30, 2023, Carrot Kuaipao has provided 3.3 million self-driving travel service orders to the public.
3. In the era of large models empowered by AI, Baidu takes the lead step by step
As mentioned in the financial report, Robin Li, chairman and CEO of Baidu, said: "Our latest large-scale model, ERNIE 3.5, has been widely recognized by our cloud customers, artificial intelligence developers and industry experts. We are reconstructing with AI native thinking Baidu’s products and services to create an innovative experience. At the same time, we are also supporting various types of enterprises to seize this opportunity through large-scale models.” Obviously, Li Yanhong and Baidu are ready before the era of large-scale models fully arrives .
Internally, Baidu continues to use AI-native thinking to build AI-native applications, reshape products and services, and build new engines : Baidu Search continues to make breakthroughs in the field of AI technology, leading intergenerational changes in search, and functions such as "AI Partner" and "AI BOT" Currently in internal testing; Baidu Library announced the internal testing of "Smart Document Assistant", which has four major highlights: service-based creation, heuristic reference, multi-format conversion, and intelligent management; Ruliu products focus on reconstructing office scenarios, such as Liuliu Many applications such as Super Assistant have been used in Baidu's internal office scenarios; Wenxin Yiyan APP has recently been launched on the Android and iOS terminals for internal testing, and the official plug-ins Baidu Search and ChatFile have been released on June 17. In the future, More high-quality Baidu official and third-party plug-ins will be released, and the plug-in ecology will be gradually opened to help developers create their own applications based on Wenxin.
** Externally, Baidu empowers customers through the iteration and development of the Wenxin model, helping customers seize the opportunity of generative AI and promote sustainable growth. ** On July 6, Shen Dou, executive vice president of Baidu, revealed at the China International Digital and Software Services Fair that Wenxin’s large-scale model has a certain scale of industrial applications: 150,000 companies have applied for access to Wenxin Test , Wenxin and more than 300 ecological partners have achieved good test results in more than 400 scenarios, and have taken the lead in more than ten industries such as energy, automobiles, government affairs, and transportation. And on July 20, Baidu Smart Medical reached a strategic cooperation with Gushengtang, a leader in traditional Chinese medicine medical services, and landed the first large-scale model in the field of traditional Chinese medicine.
In addition, the current deep learning platform Fei Paddle community gathers more than 8 million developers, the number of existing models exceeds 800,000, and serves 220,000 enterprises and institutions; with the upgrade of Wenxin Qianfan large model platform, it is fully connected to LLaMA2 The whole series, ChatGLM2, RWKV, MPT, Dolly, OpenLLaMA, Falcon and other 33 large-scale models, the number of models is the first in China, a "department store supermarket" in the large-scale model industry is taking shape; with the "Wenxin Cup" Entrepreneurship Competition Start-up, the highest award is an early investment worth 10 million yuan, and more than 1,000 start-up companies have submitted their proposals to the competition.
4. In the era of large models, Baidu, which has been accumulated for a long time, may soar into the sky
In the Nishan Dialogue on Digital Civilization held at the World Internet Conference on June 26, 2023, when talking about the reshaping of the digital world by large models, Li Yanhong pointed out, "No matter from the perspective of technological trends or industrial applications, large models are absolutely unique. It is not a flash in the pan, but a major technological change that affects human development, an engine that drives global economic growth, and a major strategic opportunity that must not be missed." Obviously, for the future under the blessing of AI, both Li Yanhong and Baidu have incomparable Unwavering eagerness and confidence.
**On the technical side, large model iterations are fast and efficient. **Baidu has upgraded to version 3.5 of Wenxin Large Model after four years of technology intensive cultivation and R&D iterations since the release of Wenxin Large Model 1.0 in March 2019. At the World Artificial Intelligence Conference on July 6, 2023, Baidu Chief Technology Officer Wang Haifeng said that compared with version 3.0, Wenxin Large Model 3.5 has achieved basic model upgrades, fine-tuned technological innovations, enhanced knowledge points, and enhanced logical reasoning, etc. , the model effect is increased by 50%, the training speed is increased by 2 times, and the reasoning speed is increased by 30 times.
**On the industry side, AI implementation has breadth and depth. **According to the latest "AI Large Model Technical Capability Evaluation Report, 2023" released by IDC, Baidu Wenxin Large Model 3.5 scored 7 out of 12 indicators in one fell swoop, ranked first in comprehensive score, first in algorithm model score, and industry coverage Ranked first, the overall competitiveness is at the leading level, and it has obvious advantages in model capabilities, tool platforms, ecological layout, and industry coverage, and has entered the commercialization exploration stage ahead of schedule.
** On the policy side, the AI policy has received positive feedback. **In July 2023, seven departments including the Cyberspace Administration of China jointly issued the "Interim Measures for the Management of Generative Artificial Intelligence Services", which generally set a tone of encouragement, emphasizing safety, inclusiveness and prudence, and classified and hierarchical supervision. At the 2023 World Artificial Intelligence Conference "Common Standards, Driving Industry——Generative Artificial Intelligence Standardization Sub-Forum", Baidu was awarded the joint leader unit of the National Artificial Intelligence Standardization General Group Large Model Special Group, and will actively participate in and promote artificial intelligence. The top-level design and rule development of model standardization will promote the high-quality development of my country's large-scale model industry.
Morgan Stanley once rated Baidu as China's leading artificial intelligence company. Baidu's positioning and goals for itself in the era of new AI infrastructure have also been moving in the direction of "AI platform companies that empower externally." Today, relying on the spirit of "results and innovations", Baidu has become one of the leaders in the competition of AI technology. As for how to go forward, we can only rely on Baidu to explore step by step. After all, Baidu is one of the few artificial intelligence companies in the world that has a full-stack layout in the four layers of "chips, frameworks, models, and applications". We have reason to believe that it is bound to go further and climb higher!