On the evening of August 12, Baidu released the second quarter financial report of this year. During the period, it achieved revenue of 31.4 billion yuan, an increase of 20% year-on-year; the net profit attributable to Baidu (non-US GAAP) was 5.4 billion yuan, an increase of only 5% year-on-year . Under the US GAAP, Baidu had a net loss of nearly 600 million yuan in the second quarter.
Investors chose to vote with their feet on this performance. At the opening of US stocks on Thursday, Baidu fell more than 5% at one time, and the closing fell still reached 3.23%. Baidu also performed poorly in the Hong Kong stock market. Today, it opened more than 3% lower. As of press time, it still fell by more than 3%, with a market value of approximately HK$435 billion.
It is worth noting that the stock price of Baidu US stocks has been cut in just half a year, and it has not been able to stabilize the market value of 100 billion US dollars. Its latest market value has fallen to 56.4 billion US dollars, which is nearly evaporated from the historical peak set in February this year. US$691 billion. After being listed on the Hong Kong stock market in March this year, Baidu’s stock price has also fallen all the way. The latest stock price is about 154 Hong Kong dollars, which is nearly 40% lower than the issue price of 252 Hong Kong dollars.
From the perspective of the capital market, the good days of Baidu’s share price soaring after the news of Baidu’s “car building” have passed. How should Baidu’s AI story continue?
Baidu posted its first net loss since the fourth quarter of 2019. In the second quarter of this year, Baidu recorded a net loss of 583 million yuan under the US GAAP, which turned from profit to loss year-on-year and quarter-on-quarter.
In this regard, Baidu explained that this is mainly related to the adjustment of the long-term investment of Kuaishou Technology at market prices. Baidu participated in the Kuaishou Series C financing in 2016. The Kuaishou Hong Kong stock prospectus shows that Baidu’s shareholding ratio was 3.78% before the listing.
In February of this year, Kuaishou listed on the Hong Kong stock market with the “first share of short video” and subsequently reached a high of 417.8 Hong Kong dollars, with a market value of 1.74 trillion Hong Kong dollars, making it China’s fifth largest Internet company in one fell swoop. Baidu’s investment income has also risen. In the first quarter of this year, Baidu’s long-term investment fair value income reached 23.7 billion yuan, which directly promoted Baidu’s net profit to surge to 25.7 billion yuan.
But the good times did not last long. Kuaishou’s stock price continued to fall in the past six months, reaching as low as 78.6 Hong Kong dollars, and it ushered in the lifting of 3.882 billion shares not long ago, causing Kuaishou’s stock price to continue to be under pressure. At present, Kuaishou’s stock price is still below 80 Hong Kong dollars, with a market value of only over 330 billion Hong Kong dollars, which has fallen by 80% within six months.
This also directly affected Baidu’s investment income and net profit in the second quarter. During the period, the long-term investment fair value loss reached 3.1 billion yuan, which also caused Baidu’s net profit to record a loss. It is foreseeable that in the next month and a half, if Kuaishou’s stock price hardly improves, Baidu may continue to lose money.
The growth rate of advertising business slows down, and the growth of smart cloud exceeds 70%
The mobile ecosystem supported by both search and information flow is Baidu’s first growth engine, and advertising is the source of revenue, which is Baidu’s basic market. In the second quarter of this year, Baidu’s online marketing service revenue was 19 billion yuan, an increase of 17% from the previous quarter and an increase of 18% from the same period last year.
At the same time, the advertising business still accounts for most of Baidu’s revenue. In the second quarter, online marketing service revenue accounted for about 60%, which was about two percentage points higher than that in the first quarter. Li Yanhong once stated in his first quarter financial report that with the strong growth of artificial intelligence, Baidu’s non-advertising revenue will exceed advertising revenue in the next three years. But from the current point of view, the proportion of advertising revenue is still too high may make this goal difficult to achieve.
In terms of user scale, in June this year, Baidu APP’s monthly active users reached 580 million, and daily logged-in users accounted for 77%. Both operating indicators maintained a sequential growth trend. At the same time, more and more merchants are adopting Baidu’s marketing cloud hosting services. In the second quarter, the proportion of hosting page revenue in Baidu’s core online marketing service revenue further increased to 40%, an increase of 5 percentage points from the first quarter.
Although the advertising business is still Baidu’s core, Baidu is no longer positioned as a search company. In the 2020 financial report released in February this year, Baidu first called itself an AI eco-type company and deleted the expression “Internet platform centered on search engines, knowledge, and information”. In the Hong Kong stock prospectus filed in March this year, Baidu claimed that it is a leading AI company with a strong Internet foundation, its core business is driven by AI, and it has identified three major growth engines.
The smart cloud business is regarded as the second growth engine. Its revenue in the second quarter increased by 71% year-on-year, surpassing Alibaba Cloud (29%), Microsoft Smart Cloud (30%), Amazon AWS (37%) and The growth rate of Google Cloud (54%), but the specific revenue was not disclosed.
Driven by the growth rate of its smart cloud business, Baidu’s core business’s non-advertising business revenue reached 5 billion yuan in the second quarter, up 80% year-on-year and 16% month-on-month. The contribution of smart cloud business to Baidu’s revenue also increased from last year. In the same period, it increased from about 10% to nearly 16%.
Public data shows that from 2018 to 2020, Baidu’s smart cloud service revenue will be 3 billion yuan, 6.4 billion yuan, and 9.2 billion yuan, respectively, accounting for 3% to 8% of Baidu’s revenue, and Alibaba Cloud’s 40 billion yuan and Tencent Cloud’s annual revenue gap of nearly 30 billion yuan is obvious. In the short term, the smart cloud business is still difficult to become the core pillar of Baidu’s revenue.
Since the beginning of this year, Baidu has further accelerated the deployment of intelligent cloud in industrial Internet, intelligent transportation and other fields, such as reaching cooperation with CCTV, Quanzhou Water Group, Geely Holding, etc. In the field of intelligent transportation cloud services, as of June this year, Baidu’s ACE intelligent transportation solution has signed 10 million orders to cover 20 cities, which is 4 times that of the same period last year.
At the Smart Economy Summit Forum held not long ago, Baidu Smart Cloud brought comprehensive upgrades in the four aspects of strategy, architecture, products, and ecology. It proposed to support the digital transformation of enterprises on the basis of “cloud computing” and use “artificial intelligence as the engine”. Accelerate the intelligent upgrading of the industry, and released Baidu Smart Cloud Architecture 2.0, which specifically includes a digital base, an intelligent engine, and full-scenario applications.
In June of this year, IDC released the “China AI Cloud Service Market 2020 Annual Research” report that Baidu Smart Cloud still ranks first in China’s AI public cloud service market share, and has won the first prize four times. However, Alibaba Cloud, Tencent Cloud, and Huawei Cloud are also close behind, especially the gap between Alibaba Cloud and Baidu Cloud is not obvious.
Baidu also has bigger goals in the smart cloud business. In June last year, Baidu announced that it would continue to increase investment in new infrastructure fields such as AI, chips, cloud computing, and data centers in the next ten years. It is expected that by 2030, Baidu’s intelligent cloud server will exceed 5 million. This is equivalent to nearly half of the global server shipments in 2019. However, Baidu has not announced the current level of shipments.
In recent years, cloud services have become a battleground for giants, and vendors such as Alibaba, Tencent, and Huawei continue to increase their layout. A veteran in the field of cloud computing said that although Baidu ranks in the forefront of the intelligent cloud service market, Baidu is still only a “niche player” in terms of the entire cloud computing market.
With the three commercialization paths of autonomous driving, the unmanned vehicle will be the first to run through?
Baidu’s second-quarter financial report also disclosed the recent progress of autonomous driving. In terms of test mileage, Baidu Apollo L4’s accumulated autonomous driving test mileage exceeded 12 million kilometers, a year-on-year increase of 152%. In terms of test qualifications, Baidu Apollo has obtained 278 autonomous driving test licenses.
In the financial report letter for the first quarter of this year, Robin Li clarified the three business models of Baidu’s Apollo business for the first time-providing Apollo autopilot technology solutions for host manufacturers to help auto companies quickly build autopilot capabilities; Baidu builds cars and integrates Baidu end-to-end Innovations in autonomous driving; the third is to share unmanned vehicles.
At present, Baidu has the ability to provide autonomous driving solutions to various host manufacturers, including L4 autonomous driving in parking scenarios, autonomous parking AVP and L2+ autonomous driving in driving scenarios, as well as city pilot assisted driving ANP, and 70 car companies, including Ford, Toyota, Hyundai, and Weimar, have reached cooperation with more than 600 models.
In April of this year, Li Zhenyu, senior vice president of Baidu Group and general manager of the intelligent driving business group, revealed at the 2021 Shanghai Auto Show that Baidu Apollo autonomous driving will usher in the peak of mass production in the second half of this year. A new car will be launched every month in the next 3-5 years. Apollo smart driving products are expected to be equipped with 1 million units in mass production.
However, the dispute over the “soul” of smart cars may make Baidu’s autonomous driving solutions face an awkward situation. Baidu’s own positioning and the degree of cooperation with car companies are issues that Baidu Apollo needs to solve. What makes many car companies afraid is that, unlike Huawei’s firm refusal to build cars, Baidu has also joined Geely to build cars, and it is expected that the first car will be launched in 2023. This is also seen as a way to promote the commercialization of Baidu Apollo. path.
Unmanned vehicles are the third path that Baidu believes is expected to usher in the breaking point of large-scale commercialization. Since May of this year, Baidu’s Apollo driverless Robotaxi, as China’s first batch of “shared driverless vehicles,” has officially started normal commercial operations and opened to the public in Beijing’s Shougang Park. This means that Apollo unmanned vehicles have realized the evolution from pure technology testing to large-scale passenger operation. Baidu said it will launch commercial exploration through discounts, experience coupons, and voluntary payments by riders.
In June of this year, Baidu Apollo also launched the fifth-generation shared unmanned vehicle Apollo Moon, which further reduced the cost per kilometer by 60%. The cost price is 480,000 yuan, which is close to the price range of mass-produced passenger cars. 1/3 of the cost of an autonomous vehicle. Baidu revealed that in the next 2-3 years, it plans to launch unmanned vehicle services in 30 domestic cities and achieve the goal of 3,000 vehicles and 3 million users.
In the conference call after the financial report, Robin Li predicted that by 2025, the overall cost of Robotaxi will be lower than the cost of manned ride-hailing cars, and the business scale will be larger by then, and this business can be listed separately. He also gave a specific value. When there are about 50 million orders per day, the cost of Robotaxi will be one-fifth of the current one.
According to data disclosed by Robin Li, Baidu Robotaxi provided 47,000 trips in the second quarter, an increase of 200% compared to the first quarter. In other words, in the second quarter, Baidu’s unmanned vehicle orders were about 522 times a day, which is a long way from the 50 million orders per day.
It can be seen that the commercialization path of Baidu’s autonomous driving basically includes the mainstream methods currently on the market, but which road will run better and faster, and when will it have a decent income. The results are not visible in the short term. .
It is worth mentioning that in the crazy rise of Baidu’s US stocks from November last year to February this year, autonomous driving and “car building” were regarded as important factors driving its valuation. Baidu Apollo was once valued by the agency at 40 billion US dollars. . “Women’s Buffett” Catherine Wood believes that Baidu will be the winner of China’s new energy vehicle market, so Baidu is constantly increasing. But as China’s concept stocks ushered in adjustments, she also chose to reduce or even liquidate positions.
With the current downturn in Baidu’s stock price, it is difficult for Baidu’s advertising business to increase its valuation. Obviously, Baidu urgently needs to prove that AI stories, including autonomous driving, are good stories.Return to Sohu to see more
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