In 2023, Baidu's NP reached CNY 28.7B, representing a year-on-year growth rate of 39%

Technology Author: EqualOcean News, Jiahui Liao Editor: Yiru Qian Feb 29, 2024 07:09 PM (GMT+8)

Its AI division has achieved incremental revenue, but its growth rate still lags behind other AI giants.


On February 28th, Baidu (9888:HK; BIDU:NASDAQ) released its financial report for the fourth quarter and full year of 2023.

In 2023, Baidu achieved a total annual revenue of RMB 134.598 billion, representing a year-on-year growth of 9%. The net profit attributable to Baidu (non-GAAP) reached RMB 28.7 billion, showing a year-on-year growth rate of 39%. Its core revenue amounted to RMB 103.5 billion, marking an 8% year-on-year increase. Within this, advertising revenue from its network reached RMB 75.1 billion, up 8%, while non-advertising revenue grew to RMB 28.4 billion, up 9%. Revenue from its subsidiary iQIYI's video business reached RMB 31.9 billion, reflecting a 10% year-on-year growth.

The financial report indicates that Baidu's operating costs for the full year of 2023 amounted to RMB 65 billion, up 2% year-on-year. Among these costs, sales, general, and administrative expenses reached RMB 23.5 billion, up 15%, while research and development expenses were RMB 24.2 billion, up 4%.

In the fourth quarter of 2023, Baidu achieved a revenue of RMB 34.951 billion, slightly below the market's expectation of RMB 35.14 billion, with a year-on-year growth of 5.67%. The net profit attributable to Baidu (non-GAAP) for the quarter reached RMB 7.755 billion, marking a significant increase of 44% year-on-year. Specifically, Baidu's core revenue in the fourth quarter reached RMB 27.5 billion, up 7% year-on-year. Within this, advertising revenue from its network reached RMB 19.2 billion, up 6%, while non-network advertising revenue reached RMB 8.3 billion, up 9%.

During the reporting period, iQIYI's revenue from operations amounted to RMB 77 billion, a 2% year-on-year increase. Operating costs totaled RMB 17.4 billion, marking a 3% year-on-year growth, primarily due to increased costs related to AI cloud services, partially offset by a decrease in content costs. iQIYI's average daily total subscription members for the fourth quarter were 100.3 million, down from 111.6 million in the same period in 2022 and 107.5 million in the third quarter of 2023, showing a year-on-year and quarter-on-quarter decline.

In terms of expenses, Baidu's revenue costs for the fourth quarter amounted to RMB 17.4 billion, reflecting a 3% year-on-year increase. Sales, general, and administrative expenses totaled RMB 5.9 billion, remaining relatively stable year-on-year, while research and development expenses reached RMB 6.3 billion, an 11% year-on-year increase.

In the mobile ecosystem, in December 2023, Baidu App's monthly active users reached 667 million, a 3% year-on-year increase.

As a long-standing internet giant, Baidu caught up with the new wave of AI in 2023. However, compared to giants like Microsoft, Google, and Meta, which have seen significant increases leveraging AI, Baidu seems to have not gained market recognition. Following the financial report, Baidu's stock price has dropped by over 10% in the first two months of this year, while Microsoft has risen by over 8%, Google has fallen by 2%, and Meta has surged by 37%, with leading AI chip developer NVIDIA rising by 56%. Nonetheless, Baidu still holds a significant position in the domestic AI field, with its self-developed large-scale model "Wenxin Yiyuan" playing a crucial role.

ERNIE Bot is Baidu's self-developed underlying large-scale model, first launched on March 16, 2023, and became one of the first large-scale model products to be filed by the end of August. Baidu's founder, chairman, and CEO, Robin Li, stated in a speech in November last year that there are over 200 large-scale models in China, and "ERNIE Bot's single model has more calls than the combined calls of these 200 large-scale models." Currently, the daily call volume of ERNIE Bot has exceeded 50 million, with a quarterly growth of 190%, and approximately 26,000 enterprises are using ERNIE Bot.

Baidu is striving to make ERNIE Bot a new growth point for the company. In the fourth quarter, leading companies such as China Samsung, Honor, and Autohome have all partnered with Baidu. Additionally, Robin Li revealed during the financial results conference call on February 28th that Baidu has been investing in text-to-video and other areas, demonstrating its emphasis on the AI large-scale model field.

Furthermore, Baidu has launched the AI Studio to provide an artificial intelligence learning and training community for AI learners. The financial report shows that AI Studio has gathered 10.7 million developers and serves 235,000 enterprises, creating 860,000 models based on AI Studio.

In terms of intelligent driving business, as of January 2, 2024, Baidu's autonomous driving travel service "Apollo" has served over 5 million trips. Within the fourth quarter, the number of "Apollo" service orders grew by 49% to 839,000, with the proportion of completely driverless orders reaching 45% in the Wuhan area. On February 27th, Baidu's "Apollo" completely driverless vehicles successfully crossed the Yangsigang Yangtze River Bridge and the Baishazhou Bridge in Wuhan, achieving autonomous driving across the Yangtze River.

Robin Li stated, "In 2023, we made significant progress in iterating ERNIE Bot, reconstructing products and services, and commercialization. Meanwhile, Baidu's core business has maintained resilience and healthy development. Looking ahead, we will continue to firmly invest in generative AI and basic models, laying the foundation for creating new growth engines."

As of the time of publication, Baidu's Hong Kong stock is priced at HKD 100.20 per share, with a total market value of HKD 280.2 billion, while its US stock is priced at USD 103.31 per share, with a total market value of USD 36.117 billion.