Baidu's advertising revenue growth slowed in the fourth quarter, and Robin Li said that more investment was needed for autonomous driving and so on

Baidu plans to focus on layout and increase investment in new businesses such as autonomous driving and intelligent cloud.

On March 1, Beijing time, Baidu (NASDAQ:BIDU, HKEX:9888) released its unaudited financial report for the fourth quarter and full year ended December 31, 2021. Total revenue in the fourth quarter was RMB33.088 billion, up 9% year-on-year and higher than the market expectation of RMB32.2 billion. Net profit attributable to Baidu (non-GAAP) in the fourth quarter was RMB4.084 billion, down 41% year-on-year and exceeding market average expectations of RMB2.9 billion.

In 2021, Baidu's annual revenue was 124.493 billion yuan, an increase of 16% year-on-year. Net profit attributable to Baidu (non-GAAP) for the full year was RMB18.83 billion, down 14% year-on-year.

Among them, Baidu's core total revenue in 2021 was 95.163 billion yuan, an increase of 21% year-on-year, exceeding market expectations. Net profit attributable to Baidu Core (non-GAAP) was RMB21.292 billion, down 21% year-on-year. Advertising revenue was 74 billion yuan, an increase of 12% year-on-year. Driven by the cloud and other AI businesses, non-advertising revenue was $21.2 billion, up 71% year-over-year.

In terms of advertising business, advertising revenue in the fourth quarter was 19.1 billion yuan, an increase of 1% year-on-year and a decrease of 2.05% sequentially. Baidu Chairman and CEO Robin Li said on the evening earnings call that the slowdown in advertising revenue growth in the fourth quarter of 2021 was mainly affected by the macro environment, and it is expected that the marketing and advertising business will improve in the first quarter of this year.

Baidu App user data reached a new high in the fourth quarter. In December 2021, Baidu App's monthly active users reached 622 million, an increase of 14% year-on-year, and the proportion of daily login users reached 82%. In the fourth quarter, custody revenue increased by 52% year-on-year, accounting for more than 40% of online marketing revenue in Baidu's core business.

Robin Li said on the call that he hopes to provide users with richer content in the mobile ecosystem, "The ecology we want to build is open, and such openness is beneficial to all users." From the perspective of content, Baidu has a hundred numbers and smart mini programs, which can help users get massive content. ”

In addition, Baidu has more repurchase behavior in 2021. According to the financial report, in the fourth quarter of 2021, Baidu repurchased about $615 million under the share repurchase program in 2020, and the cumulative repurchase amount reached about $1.2 billion in 2021. As of the end of 2021, Baidu has repurchased approximately $2.9 billion from shareholders under its 2020 share repurchase program.

"Our continued buybacks have something to do with the undervaluation of our business." Robin Li said on the conference call, "I think our corporate strategy is very clear, that is, to invest more in the company and make the company stronger." In particular, newer businesses such as autonomous driving and intelligent cloud require more investment. In terms of capital allocation, we have some new businesses that have completed financing and raised funds for future development needs. ”

Non-advertising revenue up 71% last year

Baidu Intelligent Cloud's total revenue for the year was 15.1 billion yuan, an increase of 64% year-on-year. Driven by the cloud and other AI businesses, non-advertising revenue increased by 71% year-on-year.

Robin Li said on the conference call that Baidu's focus has been on the AI layout in the process of business adjustment in 2021. AI solutions have played a positive role in the transformation of traditional industries as well as the public sector. The automotive industry, which is undergoing rapid transformation, also relies on AI, and Baidu hopes to provide the strongest support for automakers and other related partners. Efforts are being made to develop L4 level autonomous driving technology and safety performance to ensure user experience.

"Maximizing Baidu's world-class AI capabilities is the most important growth engine in the future." We hope to further consider that in the future, intelligent cloud can play a greater role in energy, water and electricity, automotive industry and other fields, and support more application scenarios through intelligent cloud. Robin Li made the above statement when looking forward to the AI layout at the conference call.

Robin Li said, "Baidu intelligent cloud can be deployed for different users, including private cloud and public cloud, we have always emphasized the deployment of the public sector in traditional industries, but the revenue growth in the private sector is also very obvious." ”

Robin Li: Apollo is considering finding more partners

Robin Li said, "In the field of intelligent transportation, Baidu's intelligent cloud has a very strong ability to generate revenue. In the long run, Baidu believes that these solutions will be more mature and standardized, so as to increase the revenue of intelligent cloud. We hope that by 2025, the Apollo autonomous driving business can be deployed to 65 cities, and by 2030, it will be deployed to 100 cities, and we can say that we will spare no effort in intelligent transportation. ”

In terms of intelligent transportation, Baidu has transferred some of its autonomous driving functions to the end of the road, reducing costs on a large scale and accelerating the pace of commercialization of autonomous driving. Among them, ACE intelligent transportation solutions have landed in many cities across the country. In 2021, the number of cities covered by Baidu ACE Smart Transportation signing tens of millions of orders increased from 14 a year ago to 35.

Robin Li said, "The rapid growth potential of Apollo intelligent driving solutions in the past is a positive factor for us to continue to move forward, and we are also working with many OEMs to introduce our intelligent driving capabilities into their vehicle tools, so as to benefit our intelligent driving technology to a wider range of people from a broader perspective." In terms of Apollo unmanned driving or Apollo autonomous driving, we will consider in what kind of scenarios we can find more partners. ”

At present, the competition for the second half of autonomous driving has begun, and large-scale commercial operations will become the focus of industry development. According to the financial report, Baidu's self-driving travel service platform Radish Quick Run unmanned vehicle orders in the fourth quarter were about 213,000 orders, an increase of nearly double from the previous quarter.

"Now there are about 100 such vehicles serving every day." Robin Li introduced on the conference call that based on experience, the more projects we operate and the more cities we cover, the more operational data we will get. This data can help us to analyze, improve service performance, and make the model smarter.

In terms of car manufacturing progress, after announcing car manufacturing in January last year, Baidu's smart car brand Jidu announced on January 26 this year that it has completed nearly 400 million US dollars of Series A financing, which was jointly increased by Baidu and strategic partner Geely. After the financing is completed, Jidu will continue to accelerate the process of R&D and mass production, and the first automotive robot concept car will be released at the Beijing Auto Show in April this year, and the mass production product will be listed in 2023.

As of the close of U.S. stocks on March 1, Baidu was trading at $162.86, up 6.84%, and as of the close of trading on March 1, Baidu Hong Kong stocks were trading at HK$148.1, up 0.47%.