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    BIDU
    Earnings call· Jun 2025(Q2 FY25)

    Baidu, Inc. BIDU

    Aug 20, 2025 Source

    Executive summary

    Baidu Q2 FY25 — AI Cloud Momentum and Global Autonomous Driving Expansion

    Baidu delivered mixed Q2 FY25 results, driven by strong AI Cloud growth and significant advancements in autonomous driving and AI-powered search transformation, which are expanding its market reach and capabilities. Despite near-term headwinds in online marketing and negative free cash flow due to AI investments, the company is strategically focusing on application-driven AI innovation and global expansion, positioning itself for long-term value creation.

    Highlights

    5

    • Baidu Core's non-online marketing revenue exceeded RMB 10 billion for the first time, up 34% year-over-year.

    • AI Cloud revenue grew 27% year-over-year to RMB 6.5 billion, with non-GAAP operating profit achieving year-over-year growth.

    • Apollo Go provided over 2.2 million fully driverless rides, up 148% year-over-year, marking its strongest quarterly growth in 2 years.

    • AI-generated content reached over 50% of mobile search result pages by the end of June, up from 35% in April.

    • Baidu App's MAU reached 735 million, representing 5% year-over-year growth, with daily average time spent per user up 4% year-over-year.

    Concerns

    5

    • Total revenues decreased 4% year-over-year to RMB 22.7 billion.

    • Baidu Core's online marketing revenue decreased 15% year-over-year to RMB 16.2 billion.

    • Revenue from iQIYI decreased 11% year-over-year to RMB 6.6 billion.

    • Free cash flow was negative RMB 4.7 billion, primarily due to increased investment in AI business.

    • Near-term revenue and margins are under considerable pressure due to AI Search transformation, with Q3 expected to be especially challenging.

    Guidance & targets

    2
    CategoryTargetConfidence
    Revenue and margins
    considerable pressure
    high materiality
    High
    Outlook for next year
    provide a clear outlook
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Baidu Core
    Baidu Core's total revenue decreased year-over-year, primarily due to a decline in online marketing revenue, partially offset by strong growth in non-online marketing revenue, driven by the AI cloud business.
    Online marketing revenue: RMB 16.2 billionOnline marketing revenue YoY growth: -15%Non-online marketing revenue: RMB 10 billionNon-online marketing revenue YoY growth: +34%Non-GAAP net margin: 18%
    		RMB 26.3 billion-2%—13% (Operating margin), 17% (Non-GAAP operating margin)
    AI Cloud
    AI Cloud revenue continued strong growth, primarily driven by increasing demand for cost-effective end-to-end AI products and solutions. Enterprise Cloud, particularly subscription-based AI infrastructure, was the main growth driver, with a focus on improving resource utilization and efficiency.
    Enterprise Cloud subscription-based revenue YoY growth: >50%Enterprise Cloud subscription-based revenue: >50% of total AI Cloud revenueAI Cloud revenue H1 2025 YoY growth: +34%
    		RMB 6.5 billion+27%—year-over-year growth in non-GAAP operating profit
    iQIYI
    Revenue from iQIYI decreased year-over-year.
    		RMB 6.6 billion-11%——

    Operational metrics

    32
    Total Revenues
    RMB 22.7 billion-4% year-over-year
    Q2 FY25

    Consolidated total revenues for the quarter.

    Cost of revenue
    RMB 18.4 billion+12% year-over-year
    Q2 FY25

    Primarily due to an increase in costs related to AI cloud business and content costs.

    Operating expenses
    RMB 11.1 billion-4% year-over-year
    Q2 FY25

    Primarily due to a decrease in personnel-related expenses, partially offset by the increase in channel spending expenses.

    Baidu Core Operating expenses
    RMB 9.7 billion-5% year-over-year
    Q2 FY25

    Operating expenses specific to Baidu Core segment.

    Baidu Core SG&A expenses
    RMB 5 billion+6% year-over-year
    Q2 FY25

    SG&A expenses for Baidu Core, as a percentage of Baidu Core's revenue.

    Baidu Core R&D expenses
    RMB 4.7 billion-14% year-over-year
    Q2 FY25

    R&D expenses for Baidu Core, as a percentage of Baidu Core's revenue.

    Non-GAAP operating income
    RMB 4.4 billion
    Q2 FY25

    Company-wide non-GAAP operating income.

    Total other income net
    RMB 4.9 billion+531% year-over-year
    Q2 FY25

    Primarily due to an increase in the fair value gain and a pickup of earnings from long-term investments, partially offset by increase in the net foreign exchange loss arising from exchange rate fluctuation between RMB and the U.S. dollar.

    Income tax expenses
    RMB 881 millionvs RMB 1.1 billion in same period last year
    Q2 FY25

    Income tax expenses for the quarter.

    Non-GAAP net income attributable to Baidu
    RMB 4.8 billion
    Q2 FY25

    Company-wide non-GAAP net income.

    Non-GAAP diluted earnings per ADS
    RMB 13.58
    Q2 FY25

    Non-GAAP diluted earnings per American Depositary Share.

    Non-GAAP net income attributable to Baidu Core
    RMB 4.8 billion
    Q2 FY25

    Non-GAAP net income specific to Baidu Core segment.

    Cash, cash equivalents, restricted cash and short-term investments
    RMB 124.2 billion
    as of June 30, 2025

    Total cash and liquid investments.

    Cash, cash equivalents, research cash and short-term investments, excluding iQIYI
    RMB 119.9 billion
    as of June 30, 2025

    Cash and liquid investments excluding the iQIYI segment.

    Cash, cash equivalents, short-term investments and long-term time deposits and held-to-maturity investments for Baidu Core
    RMB 229.7 billion
    as of June 30, 2025

    Total cash and investments for Baidu Core.

    Net cash position for Baidu
    RMB 155.1 billion
    as of June 30, 2025

    Defined as total cash, cash equivalents, restricted cash, short-term investments, net long-term time deposits held-to-maturity investments and others, less total loans, convertible senior notes and notes payable.

    Baidu Core employees
    31,000
    as of June 30, 2025

    Total number of employees in Baidu Core segment.

    AI-generated content penetration in mobile search result pages
    64%up from 35% in April
    July

    Percentage of mobile search result pages containing AI-generated content.

    AI-generated content reach on Baidu App MAU
    over 90%
    July

    Percentage of Baidu App's monthly active users exposed to AI transformation.

    Rich media elements in AI search result pages
    over 60%
    July

    Percentage of AI search result pages starting with rich media elements such as images or videos.

    Daily AIGC video generation
    millions of units
    starting from May

    Scale of AI-generated video content.

    Baidu App MAU
    735 million+5% year-over-year
    June

    Monthly Active Users for Baidu App.

    Daily average time spent per user
    4%year-over-year increase
    Q2 FY25

    Increase in daily average time spent per user on Baidu App.

    Large-scale key clusters GPU utilization rates
    over 90%
    recently

    Utilization rates for key tasks in large-scale GPU clusters, achieved through system engineering breakthroughs.

    Embodied AI industry partnerships
    20 companies
    cumulatively

    Number of partnerships in the embodied AI industry, including 4 top humanoid robot companies.

    AI contributed to new code generation (internal)
    over 45%
    July

    Percentage of new code generated with AI coding assistant Comate, with developer oversight.

    Applications created on Miaoda (no-code)
    around 200,000
    as of July

    Number of applications created by users using Miaoda's no-code capabilities.

    Apollo Go cumulative rides
    over 14 million
    as of August

    Total fully driverless rides provided to the public since inception.

    Apollo Go global footprint
    16 cities
    as of June

    Number of cities where Apollo Go operates.

    Autonomous kilometers accumulated
    over 200 million
    to date

    Total autonomous driving distance accumulated by Apollo Go fleets.

    Revenue generated by agents for advertisers
    50%quarter-over-quarter growth
    Q2 FY25

    Revenue generated by AI agents for advertisers, contributing to Baidu Core's online marketing revenue.

    Revenue generated by digital human
    55%quarter-over-quarter increase
    Q2 FY25

    Revenue generated by digital human technology, contributing to Baidu Core's online marketing revenue.

    Industry KPIs

    6
    MetricValueDetails
    Family dap dau735 millionusers
    CAPEX compute commitmentsnegative RMB 4.7 billionRMB
    Advertising revenue by segmentRMB 16.2 billionRMB
    Share buyback capital returned—
    Ai feature adoption monetizationtens of millionsRMB
    Custom silicon ai infrastructureover 90%%

    Product announcements

    3
    ProductTypeDetails
    ERNIE next flagship versionroadmap
    MuseSteamer (latest version)update
    Miaoda no-code capabilitiesexpansion

    Deals & partnerships

    7
    UberMultiyear strategic partnership to deploy thousands of Apollo Go fully autonomous vehicles on Uber platform across multiple international markets.multiyear

    Initial rollouts planned for Asia and the Middle East.

    LyftPartnership to bring thousands of Apollo Go fully autonomous vehicles to key European markets through Lyft platform.

    Starting with Germany and United Kingdom, scaling across Europe over time.

    HelloRidePartnership to accelerate the rollout of asset-light business models domestically for Apollo Go.

    Expands collaborative network with leading mobility service providers in China.

    T3 MobilityPartnership to accelerate the rollout of asset-light business models domestically for Apollo Go.

    Expands collaborative network with leading mobility service providers in China.

    Car Inc.Apollo Go's fully autonomous vehicle rental service officially went live on the Car Inc. app.

    Building on a partnership announced last quarter.

    Black Sesame TechnologiesPartnership on AI cloud infrastructure.

    Collaboration in the AI cloud infrastructure space.

    Shenzhen Institute of Artificial Intelligence And Robotics for SocietyPartnership in the embodied AI industry.

    One of 20 cumulative partnerships in the embodied AI industry.

    Risks & headwinds

    3
    Near-term headwinds in online marketing businessNear-term

    Baidu Core's online marketing revenue decreased 15% year-over-year to RMB 16.2 billion.

    Mitigation: Offset by AI cloud momentum and non-online marketing revenue growth.

    Revenue and margins under considerable pressure due to AI Search transformationNear-term (Q3 FY25)

    Q3 expected to be especially challenging.

    Mitigation: Actively drive internal efficiency gains, strengthen resource coordination efforts across different business groups, and improve overall resource utilization efficiency. Long-term recovery expected as core advertising recovers and non-advertising businesses expand.

    Negative free cash flow due to increased investment in AI businessQ2 FY25

    Free cash flow was negative RMB 4.7 billion.

    Mitigation: Strategic investment for long-term value creation, with expected gradual recovery in profitability over time.

    What to watch in Q3 FY25

    5

    AI Search monetization progress

    Next quarter and beyond
    CurrentEarly small-scale testing, encouraging signals
    TargetLarge-scale monetization not started yet, but will continue to expand

    Why it matters

    Demonstrates the commercial viability of AI Search transformation and its potential to offset online marketing headwinds.

    While it's still in early days💬, we have seen the very encouraging signals, and we believe this trend will continue over time⏳. That said, we always put user experiences first. So we chose very deliberate approach to AI Search monetization and large-scale monetization has not started yet.

    Q&A highlights

    7

    How does Baidu position ERNIE strategically, and what are the plans for ERNIE in H2, including ERNIE 5.0?

    Robin Li emphasized an application-driven approach for ERNIE, focusing on areas with meaningful impact like AI Search transformation and digital human technology. He noted the model landscape is diverse and value creation is at the application level. Baidu is working on the next flagship ERNIE version with significant improvements, to be launched when ready, alongside ongoing iterations.

    “The value creation will happen at the application level more than at the model level.”

    asked by Alicia Yap · answered by Yanhong Li

    2 min read7 chapters

    Detailed Narrative

    01

    Foundation Model Development and ERNIE

    Baidu is focused on application-driven foundation model development, with ERNIE 4.5 Turbo powering digital human technology for live streaming e-commerce, generating tens of millions in GMV. They are exploring frontiers of foundation model research and pushing AI capabilities, with value creation expected at the application level. The company is working on the next flagship ERNIE version with significant improvements, to be launched when ready, alongside ongoing iterations.

    02

    AI Cloud and 4-Layer Architecture

    Baidu's unique 4-layer end-to-end AI architecture is a core competitive advantage, driving healthy growth in AI Cloud. A breakthrough in prefiled detailed separation architecture significantly improves inference efficiency and reduces costs, reinforcing its position as a top-tier AI cloud provider. This allows for better performance at lower cost and more competitive pricing for enterprise customers, creating a virtuous cycle.

    03

    Qianfan MaaS Platform Evolution

    Qianfan continues to evolve, offering a comprehensive model library including ERNIE 4.5 series and third-party models. It provides enhanced stability, higher concurrency, and lower inference costs, solidifying its leadership as a MaaS platform. Qianfan's tool chains are among the most comprehensive, supporting a wider range of AI tools and functions via MCP or API, simplifying AI application development.

    04

    Autonomous Driving (Apollo Go) Global Expansion

    Apollo Go provided over 2.2 million fully driverless rides, up 148% YoY, marking its strongest quarterly growth in 2 years. Strategic partnerships with Uber and Lyft will deploy thousands of autonomous vehicles in international markets (Asia, Middle East, Europe), leveraging an asset-light model and strong unit economics achieved in China. Apollo Go leads in both left-hand and right-hand drive robotaxi markets, with its RT6 vehicle offering the lowest unit cost globally for Level 4 autonomous driving.

    05

    AI Transformation of Baidu Search

    Baidu is revolutionizing search by replacing static hyperlinks with intelligent, structured, multi-model first AI-generated responses. AI-generated content reached 64% of mobile search result pages by July, reaching over 90% of MAUs, with over 60% starting with rich media. This transformation aims to expand search boundaries from providing answers to completing tasks and connecting real-world services through agents.

    06

    Internal AI Productivity and External Democratization

    Internally, Comate, an AI coding assistant, contributed to generating over 45% of new code in July, significantly boosting R&D efficiency. Externally, Miaoda extends AI development capabilities to the broader community, offering no-code functionalities. As of July, users have created around 200,000 applications on Miaoda completely without writing a single line of code, democratizing AI innovation.

    07

    AI Search Monetization and Digital Humans

    Early small-scale monetization testing for AI Search shows potential, especially for previously difficult-to-monetize queries. Agents grew revenue for advertisers by 50% QoQ, contributing 13% of online marketing revenue. Digital humans increased revenue by 55% QoQ, contributing 3% of online marketing revenue, adopted in sectors like healthcare, legal, education, and automotive for boosting conversion performance.

    AI-generated summary of the company’s earnings call. Not investment advice.