Baidu Earnings Call: AI Cloud Shines Amid Mixed Results

Baidu Inc ((BIDU)) has held its Q4 earnings call. Read on for the main highlights of the call.

Baidu Inc.’s recent earnings call struck a generally positive note, propelled by strong growth within its AI Cloud sector and the solid performance of ERNIE, its AI model. These advancements were complemented by significant strides in autonomous driving and AI-powered search capabilities. However, these achievements were slightly overshadowed by declines in online marketing and iQIYI revenues, as well as reduced operating income due to one-time losses.

AI Cloud Revenue Growth

Baidu’s AI Cloud business demonstrated impressive growth, with a year-over-year revenue increase of 26% in the fourth quarter of 2024. This contributed to an overall annual revenue growth of 17%. A significant driver behind this was the surge in GenAI-related revenue, which nearly tripled compared to the previous year.

ERNIE’s Strong Performance

ERNIE, Baidu’s AI model, showcased its robust capabilities by handling approximately 1.65 billion API calls daily in December 2024. The increase in external API calls was remarkable, growing 178% quarter-over-quarter, indicating strong demand and utilization of Baidu’s AI services.

Apollo Go Expansion

In the realm of autonomous driving, Baidu’s Apollo Go service expanded significantly by providing around 1.1 million rides in the fourth quarter of 2024, reflecting a 36% year-over-year growth. Notably, Apollo Go achieved 100% fully driverless operations across the nation, underscoring Baidu’s leadership in autonomous vehicles.

Search Transformation

Baidu’s search platform saw significant enhancements with AI-generated content appearing in 22% of search result pages. This development led to improved user metrics and a modest 2% year-over-year increase in daily search queries per user in December 2024, highlighting the evolving nature of search technology driven by AI.

Baidu Wenku Growth

Baidu Wenku experienced a notable increase in subscription revenue, growing by 21% year-over-year. The platform also saw a near doubling of monthly active users engaging with AI-enabled features quarter-over-quarter, illustrating the growing appeal of its AI-driven offerings.

Online Marketing Revenue Decline

Despite successes in other areas, Baidu’s Core online marketing revenue faced a setback, decreasing by 7% year-over-year in the fourth quarter of 2024. This segment accounted for 65% of Baidu Core’s total revenues, emphasizing the need for strategic adjustments.

iQIYI Revenue Decline

Revenue from iQIYI, Baidu’s online video platform, dropped by 14% year-over-year in the fourth quarter of 2024, with a total annual decline of 8%. This indicates challenges in the highly competitive online video market.

Operating Income Decline

Baidu reported an operating income of RMB3.9 billion for the fourth quarter of 2024, down from RMB5.4 billion in the previous year. This decline was primarily due to one-time losses, including accrual of credit losses and inventory write-downs, affecting the overall profitability.

Forward-Looking Guidance

Baidu’s earnings call provided insights into strategic priorities moving forward. The company highlighted its focus on AI innovations, particularly within the AI Cloud and autonomous driving sectors, as areas for continued investment to maintain leadership in the AI industry. The firm also plans to accelerate its stock buyback program, having repurchased over $1 billion since early 2024, reflecting confidence in its long-term growth prospects.

In summary, Baidu’s latest earnings call revealed a mixed yet overall positive outlook, driven by significant growth in AI Cloud and autonomous driving sectors. While challenges remain in online marketing and iQIYI revenues, the company’s strategic focus on AI innovations and operational efficiencies positions it well for sustained future growth.