Baidu (BIDU) 6-K Baidu Announces Second Quarter 2021 Results

Exhibit 99.1

Baidu Announces Second Quarter 2021 Results

BEIJING, China, August 12, 2021 – Baidu, Inc. (NASDAQ: BIDU and HKEX: 9888) (“Baidu” or the “Company”), a leading AI company with strong Internet foundation, today announced its unaudited financial results for the second quarter ended June 30, 2021.

“Baidu Core delivered another strong quarter, powered by the fast growth of our new AI business. AI enables businesses and local governments to do more and serve more people,” said Robin Li, co-founder and CEO of Baidu. “We are excited about the opportunities to help different industries transform their business with AI and support our goal to become carbon neutral by 2030.”

“Baidu Core revenue grew 27% year over year in the second quarter, boosted by AI cloud growing 71% year over year,” said Herman Yu, CFO of Baidu. “Baidu’s search and feed business was solid, and we continue to execute and lead on our new AI business, including AI cloud, autonomous driving and smart assistant.”

Second Quarter 2021 Financial Highlights¹

	Baidu, Inc.
(In millions except per ADS, unaudited)	Q2 2020			Q1 2021			Q2 2021						YOY			QOQ
	RMB			RMB			RMB			US$
Total revenues		26,034			28,134			31,350			4,855			20	%		11	%
Operating income		3,644			2,789			3,463			536			(5	%)		24	%
Operating income (non-GAAP) 2		5,605			4,362			5,653			876			1	%		30	%
Net income (loss) to Baidu		3,579			25,653			(583	)		(90	)		—			—
Net income to Baidu (non-GAAP) 2		5,082			4,297			5,359			830			5	%		25	%
Diluted earnings (loss) per ADS		10.31			73.76			(1.70	)		(0.26	)		—			—
Diluted earnings per ADS (non-GAAP) 2		14.73			12.38			15.41			2.39			5	%		24	%
Adjusted EBITDA 2		7,015			5,900			7,295			1,130			4	%		24	%
Adjusted EBITDA margin		27	%		21	%		23	%		23	%

¹  Unless otherwise noted, RMB to USD was converted at an exchange rate of RMB6.4566 as of June 30, 2021, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Translations are provided solely for the convenience of the reader.

²  Non-GAAP measures are defined in the Non-GAAP Financial Measures section (see also “Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures” for more details).

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	Baidu, Core
(In millions, unaudited)	Q2 2020			Q1 2021			Q2 2021						YOY			QOQ
	RMB			RMB			RMB			US$
Total revenues		18,926			20,483			24,041			3,723			27	%		17	%
Operating income		4,966			3,847			4,619			715			(7	%)		20	%
Operating income (non-GAAP) 2		6,482			5,064			6,467			1,002			(0	%)		28	%
Net income to Baidu Core		4,424			26,354			172			27			(96	%)		(99	%)
Net income to Baidu Core (non-GAAP) 2		5,656			4,870			5,942			920			5	%		22	%
Adjusted EBITDA2		7,771			6,487			7,991			1,238			3	%		23	%
Adjusted EBITDA margin		41	%		32	%		33	%		33	%

Other Highlights

Corporate

• Q2 2021 net loss of RMB 0.6 billion included a RMB 3.1 billion fair value loss from long-term investments, compared to a fair value gain of RMB 23.7 billion in Q1 2021, both primarily related to a mark-to-market adjustment on Kuaishou Technology (see also Total other loss, net below).

• ESG: in June, Baidu announced its goal to become carbon neutral by 2030.

• Baidu’s low-carbon business practices have been featured in the UN Global Compact Corporate Net Zero Pathway Report.

• Baidu’s data center in Yangquan, Shanxi was awarded the carbon neutral data center leader (5A) certification (highest rating of green data centers).

• Baidu has returned US$566 million to shareholders under the 2020 Share Repurchase Program this year, bringing the cumulative repurchase to $2.5 billion since 2020.

AI Cloud

• Baidu held the Intelligent Economy Summit on July 29^th, featuring speakers from leading enterprises and municipalities highlighting the importance of AI to the development of industrial internet, smart city and digital economy.

• Baidu was ranked the No. 1 AI cloud provider again, according to IDC’s 2020 China’s public cloud market report.

• Baidu deep learning platform became the most widely used in China, according to an IDC report in June 2021. PaddlePaddle developer community grew to 3.6 million, up 62% year over year, and serves 130,000 businesses.

• Baidu signed with Geely Holding, a leading automotive manufacturer, to provide private cloud solution and other cloud applications, to enable Geely to leverage Baidu’s AI to optimize its manufacturing capabilities and provide cloud services to its automotive suppliers and customers.

• Quanzhou, Fujian with a resident of 8 million, implemented Baidu AI solutions to remotely monitor its water-treatment plant for equipment malfunction and dynamically adjust water pressure, based on predicted usage, cutting electricity use by 8%.

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• Coverage of Apollo ACE smart transportation has grown to 20 cities in June 2021, up four folds from a year ago, based on contract amounts over RMB 10 million.

• Xiongan, Hebei signed with Apollo ACE to deploy V2X smart highway, to remotely detect highway maintenance needs, assess road closure for poor weather conditions and identify travelers who dodge toll terminals.

Intelligent Driving

• Apollo L4 autonomous driving accumulated 7.5 million test miles, up 152% year over year. Apollo has received 278 autonomous driving permits, reflecting Apollo’s piloting in dispersed geographic regions and under wide-ranging test scenarios.

• Baidu introduced Apollo’s 5th generation robotaxi vehicles in June, which again saw a 60% drop in cost per mile.

• Apollo Go ride hailing expanded into Guangzhou, Guangdong, its fourth city of operation, and provided 47K trips to the public, up 200% sequentially, in Q2. Customer satisfaction has been high, with user rating averaging 4.9 out of 5.0.

• Great Wall Motors announced in June that its flagship WEY Mocha SUV will feature Apollo Automated Valet Parking (AVP) in its new release later this year.

Other Growth Initiatives

• Xiaodu was ranked No.1 in smart display shipments globally and No.1 in smart speaker shipments in China, according to IDC and Canalys, for Q1 2021.

• China’s elderly population is slated to exceed 300 million. Xiaodu smart displays connect elders with immediate senior-community assistance and serve as an always-on virtual companionship through conversational AI, improving their quality of life, while allowing family members to remotely monitor their love ones.

• Xiaodu’s Tiantian T10 (10” smart display with karaoke) was released in May at an MSRP of RMB1,699, exemplifying how hardware can be differentiated with AI features.

• Xiaodu services revenue, including advertising and membership, grew 5 folds from last year, accounting for over 10% of Xiaodu Q2 revenue.

Mobile Ecosystem

• In June, Baidu MAUs reached 580 million and daily logged in users reaching 77%.

• Managed Page reached 40% of Baidu Core Q2 online marketing revenue, as merchants adopted Baidu’s hosted service with marketing cloud for their online storefront.

iQIYI

• iQIYI subscribers reached 106.2 million in June 2021, serving as a strong foundation to support in-house production of entertainment blockbuster originals.

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Second Quarter 2021 Financial Results

Total revenues were RMB 31.4 billion ($4.86 billion), increasing 20% year over year.

• Revenue from Baidu Core was RMB 24.0 billion ($3.72 billion), increasing 27% year over year; online marketing revenue was RMB 19.0 billion ($2.95 billion), up 18% year over year, and non-online marketing revenue was RMB 5.0 billion ($771 million), up 80% year over year, driven by cloud and other services.

• Revenue from iQIYI was RMB 7.6 billion ($1.18 billion), increasing 3% year over year.

Cost of revenues was RMB 15.9 billion ($2.46 billion), increasing 21% year over year, primarily due to an increase in traffic acquisition costs and cost of goods sold related to new AI business.

Selling, general and administrative expenses were RMB 5.7 billion ($884 million), increasing 29% year over year, primarily due to an increase in channel spending, promotional expenses and personnel-related expenses.

Research and development expense was RMB 6.3 billion ($973 million), increasing 30% year over year, primarily related to personnel-related expenses.

Operating income was RMB 3.5 billion ($536 million). Baidu Core operating income was RMB 4.6 billion ($715 million), and Baidu Core operating margin was 19%. Non-GAAP operating income was RMB 5.7 billion ($876 million). Non-GAAP Baidu Core operating income was RMB 6.5 billion ($1.00 billion), and non-GAAP Baidu Core operating margin was 27%.

Total other loss, net was RMB 2.4 billion ($376 million), which included a fair value loss of RMB 3.1 billion from long-term investments. A significant portion of long-term investments is subject to quarterly mark-to-market adjustment, which may contribute to net income volatility in the future.

Income tax expense was RMB 2.2 billion ($341 million), increasing year over year primarily due to an increase in deferred income tax expense recognized on the fair value gain of certain long-term investments.

Net loss attributable to Baidu was RMB 583 million ($90 million), and diluted loss per ADS was RMB 1.70 ($0.26). Net income attributable to Baidu Core was RMB 172 million ($27 million). Non-GAAP net income attributable to Baidu was RMB 5.4 billion ($830 million), and non-GAAP diluted earnings per ADS was RMB 15.41 ($2.39). Non-GAAP net income attributable to Baidu Core was RMB 5.9 billion ($920 million).

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Adjusted EBITDA was RMB 7.3 billion ($1.13 billion). Adjusted EBITDA for Baidu Core was RMB 8.0 billion ($1.24 billion) and adjusted EBITDA margin for Baidu Core was 33%.

As of June 30, 2021, cash, cash equivalents, restricted cash and short-term investments were RMB 179.9 billion ($27.87 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB 167.7 billion ($25.97 billion). Free cash flow was RMB 5.4 billion ($843 million), and free cash flow excluding iQIYI was RMB 6.9 billion ($1.07 billion).

Management Transition

Baidu today is pleased to announce that Herman Yu has been appointed as Chief Strategy Officer (CSO) of the Company, and will be responsible for corporate strategy and business development. Mr. Yu will report to Baidu’s CEO Robin Li. Mr. Yu will continue to serve as CFO until the appointment of a new CFO.

Financial Guidance

For the third quarter of 2021, Baidu expects revenues to be between RMB 30.6 billion ($4.7 billion) and RMB 33.5 billion ($5.2 billion), representing a growth rate of 8% to 19% year over year, which assumes that Baidu Core revenue will grow between 9% and 20% year over year.

The COVID-19 situation in China is evolving and business visibility is limited. The above forecast reflects Baidu’s current and preliminary view, which is subject to substantial uncertainties.

Conference Call Information

Baidu’s management will hold an earnings conference call at 8:00 AM on August 12, 2021, U.S. Eastern Time (8:00 PM on August 12, 2021, Beijing Time).

Please register in advance of the conference call using the link provided below. Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode and unique registrant ID by email.

For pre-registration, please click http://apac.directeventreg.com/registration/event/3059294. It will automatically direct you to the registration page of “Baidu Q2 2021 Earnings Conference Call”, where you may fill in your details for RSVP. If it requires you to enter a participant conference ID, please enter “ 3059294”.

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In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), Direct Event passcode and unique registrant ID) provided in the confirmation email that you have received following your pre-registration.

Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com.

A replay of the conference call may be accessed by phone at the following number until August 20 2021:

International:	+61 2 8199 0299
Conference ID:	3059294

About Baidu

Founded in 2000, Baidu’s mission is to make the complicated world simpler through technology. Baidu is a leading AI company with strong Internet foundation, trading on the NASDAQ under “BIDU” and HKEX under “9888”. One Baidu ADS represents eight Class A ordinary shares.

Contacts

Investors Relations, Baidu, Inc.

Tel: +86-10-5992-8888

Email: ir@baidu.com

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the outlook for the third quarter of 2021, quotations from management in this announcement, as well as Baidu’s and other parties’ strategic and operational plans, contain forward-looking statements. Baidu may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in announcements made on the website of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Baidu’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Baidu’s growth strategies; its future business development, including development of new products and services; its ability to attract and retain users and customers; competition in the Chinese Internet search and newsfeed market; competition for online marketing customers; changes in the Company’s revenues and certain cost or expense items as a percentage of its revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to intellectual property rights; the expected growth of the Chinese-language Internet search and newsfeed market and the number of Internet and broadband users in China; Chinese governmental policies relating to the Internet and Internet search providers, and general economic conditions in China and elsewhere. Further information regarding these and other risks is included in the Company’s annual report on Form 20-F and other documents filed with the Securities and Exchange Commission, and announcements on the website of the Hong Kong Stock Exchange. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of the press release, and Baidu undertakes no duty to update such information, except as required under applicable law.

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Non-GAAP Financial Measures

To supplement Baidu’s consolidated financial results presented in accordance with GAAP, Baidu uses the following non-GAAP financial measures: non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss) attributable to Baidu, non-GAAP net margin, non-GAAP diluted earnings per ADS, adjusted EBITDA, adjusted EBITDA margin and free cash flow. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Baidu believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain items that may not be indicative of its recurring core business operating results, such as operating performance excluding non-cash charges or non-operating in nature. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to Baidu’s historical performance and liquidity. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a significant component in the Company’s results of operations. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data.

Non-GAAP operating income represents operating income excluding share-based compensation expenses and amortization and impairment of intangible assets resulting from business combinations.

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Non-GAAP net income attributable to Baidu represents net income attributable to Baidu excluding share-based compensation expenses, amortization and impairment of intangible assets resulting from business combinations, disposal gain or loss, impairment of long-term investments, fair value change of long-term investments, adjusted for related income tax effects. Baidu’s share of equity method investments for these non-GAAP reconciling items, amortization and impairment of intangible assets not on the investees’ books, accretion of their redeemable non-controlling interests, and the gain or loss associated with the issuance of shares by the investees at a price higher or lower than the carrying value per shares, adjusted for related income tax effects, are also excluded.

Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated by dividing non-GAAP net income attributable to Baidu, which is adjusted for accretion for the redeemable non-controlling interests, by the weighted average number of ordinary shares expressed in ADS. Adjusted EBITDA represents operating income excluding depreciation, amortization and impairment of intangible assets resulting from business combinations, and share-based compensation expenses.

For more information on non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures.”

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Baidu, Inc.

Condensed Consolidated Statements of Income (Loss)

(In millions except for per share (or ADS) information, unaudited)

	Three Months Ended												Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,			June 30,			June 30,
	2020			2021			2021			2021			2020			2021			2021
	RMB			RMB			RMB			US$(2)			RMB			RMB			US$(2)
Revenues:
Online marketing services		17,688			18,094			20,828			3,225			31,931			38,922			6,028
Others		8,346			10,040			10,522			1,630			16,648			20,562			3,185
Total revenues		26,034			28,134			31,350			4,855			48,579			59,484			9,213
Costs and expenses:
Cost of revenues(1)		13,134			15,002			15,897			2,462			27,821			30,899			4,785
Selling, general and administrative(1)		4,417			5,245			5,707			884			8,269			10,952			1,697
Research and development(1)		4,839			5,098			6,283			973			9,282			11,381			1,763
Total costs and expenses		22,390			25,345			27,887			4,319			45,372			53,232			8,245
Operating income		3,644			2,789			3,463			536			3,207			6,252			968
Other income (loss):
Interest income		1,312			1,233			1,342			208			2,753			2,575			399
Interest expense		(820	)		(823	)		(845	)		(131	)		(1,571	)		(1,668	)		(258	)
Foreign exchange income (loss), net		55			156			(36	)		(6	)		(43	)		120			19
Share of loss from equity method investments		(1,732	)		(151	)		(4	)		(1	)		(1,551	)		(155	)		(24	)
Others, net		1,551			23,362			(2,887	)		(446	)		(265	)		20,475			3,171
Total other income (loss), net		366			23,777			(2,430	)		(376	)		(677	)		21,347			3,307
Income before income taxes		4,010			26,566			1,033			160			2,530			27,599			4,275
Income tax expense		1,222			1,534			2,197			341			1,420			3,731			578
Net income (loss)		2,788			25,032			(1,164	)		(181	)		1,110			23,868			3,697
Net loss attributable to noncontrolling interests		(791	)		(621	)		(581	)		(91	)		(2,510	)		(1,202	)		(186	)
Net income (loss) attributable to Baidu		3,579			25,653			(583	)		(90	)		3,620			25,070			3,883

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	Three Months Ended										Six Months Ended
	June 30,		March 31,		June 30,			June 30,			June 30,		June 30,		June 30,
	2020		2021		2021			2021			2020		2021		2021
	RMB		RMB		RMB			US$(2)			RMB		RMB		US$(2)
Earnings (loss) per ADS (1 ADS representing 8 Class A ordinary shares):
— Basic		10.34		76.10		(1.70	)		(0.26	)		10.37		73.12		11.32
— Diluted		10.31		73.76		(1.70	)		(0.26	)		10.32		71.23		11.03
Earnings (loss) per share for Class A and Class B ordinary shares:
— Basic		1.29		9.51		(0.21	)		(0.03	)		1.30		9.14		1.42
— Diluted		1.29		9.22		(0.21	)		(0.03	)		1.29		8.90		1.38
Weighted average number of Class A and Class B ordinary shares outstanding (in millions):
— Basic		2,750		2,692		2,782			2,782			2,758		2,737		2,737
— Diluted		2,760		2,777		2,782			2,782			2,771		2,809		2,809
(1)   Includes share-based compensation expenses as follows:
Cost of revenues		108		79		112			18			189		191		30
Selling, general and administrative		550		471		483			75			1,014		954		147
Research and development		1,188		949		1,521			236			2,133		2,470		384
Total share-based compensation expenses		1,846		1,499		2,116			329			3,336		3,615		561

(2) All translations from RMB to U.S. dollars are made at a rate of RMB6.4566 to US$1.00, the exchange rate in effect as of June 30, 2021 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System.

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Baidu, Inc.

Condensed Consolidated Balance Sheets

(In millions, unaudited)

	December 31,		June 30,		June 30,
	2020		2021		2021
	RMB		RMB		US$
ASSETS
Current assets:
Cash and cash equivalents		35,782		42,896		6,644
Restricted cash		758		10,652		1,649
Short-term investments, net		126,402		126,387		19,575
Accounts receivable, net		8,668		9,197		1,424
Amounts due from related parties		726		866		134
Other current assets, net		11,006		9,936		1,539
Total current assets		183,342		199,934		30,965
Non-current assets:
Fixed assets, net		17,508		18,554		2,874
Licensed copyrights, net		6,435		6,714		1,040
Produced content, net		6,556		8,676		1,344
Intangible assets, net		2,022		1,883		292
Goodwill		22,248		22,592		3,499
Long-term investments, net		76,233		101,310		15,691
Amounts due from related parties		3,438		3,484		540
Deferred tax assets, net		1,674		433		67
Operating lease right-of-use assets		9,804		10,058		1,558
Other non-current assets		3,448		15,649		2,423
Total non-current assets		149,366		189,353		29,328
Total assets		332,708		389,287		60,293

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	December 31,		June 30,		June 30,
	2020		2021		2021
	RMB		RMB		US$
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans		3,016		3,025		469
Accounts payable and accrued liabilities		36,716		38,276		5,928
Customer deposits and deferred revenue		12,626		13,400		2,075
Deferred income		158		108		17
Long-term loans, current portion		7,427		915		142
Convertible senior notes, current portion		4,752		4,777		740
Amounts due to related parties		1,324		1,802		279
Operating lease liabilities		2,366		2,495		386
Total current liabilities		68,385		64,798		10,036
Non-current liabilities:
Deferred income		97		108		17
Deferred revenue		686		316		49
Amounts due to related parties		3,543		3,384		524
Long-term loans		—		12,784		1,980
Notes payable		48,408		47,915		7,421
Convertible senior notes		11,927		12,592		1,950
Deferred tax liabilities		3,067		3,275		507
Operating lease liabilities		4,693		4,696		727
Other non-current liabilities		59		91		15
Total non-current liabilities		72,480		85,161		13,190
Total liabilities		140,865		149,959		23,226
Redeemable noncontrolling interests		3,102		4,814		746
Equity
Total Baidu shareholders’ equity		182,696		228,907		35,453
Noncontrolling interests		6,045		5,607		868
Total equity		188,741		234,514		36,321
Total liabilities, redeemable noncontrolling interests, and equity		332,708		389,287		60,293

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Baidu, Inc.

Selected Information

(In millions, unaudited)

	Three months ended June 30, 2020 (RMB)												Three months ended March 31, 2021 (RMB)												Three months ended June 30, 2021 (RMB)												Three months ended June 30, 2021 (US$)
	Baidu						Elim &			Baidu,			Baidu						Elim &			Baidu,			Baidu						Elim &			Baidu,			Baidu						Elim &			Baidu,
	Core			iQIYI			adj(2)			Inc.			Core			iQIYI			adj(2)			Inc.			Core			iQIYI			adj(2)			Inc.			Core			iQIYI			adj(2)			Inc.
Total revenues		18,926			7,412			(304	)		26,034			20,483			7,968			(317	)		28,134			24,041			7,608			(299	)		31,350			3,723			1,178			(46	)		4,855
YOY																										27	%		3	%					20	%
QOQ																										17	%		(5	%)					11	%
Costs and expenses:
Cost of revenues(1)		6,555			6,834			(255	)		13,134			8,162			7,109			(269	)		15,002			9,289			6,869			(261	)		15,897			1,439			1,063			(40	)		2,462
Selling, general and administrative(1)		3,230			1,196			(9	)		4,417			4,048			1,201			(4	)		5,245			4,526			1,185			(4	)		5,707			701			184			(1	)		884
Research and development(1)		4,175			664			—			4,839			4,426			672			—			5,098			5,607			676			—			6,283			868			105			—			973
Total costs and expenses		13,960			8,694			(264	)		22,390			16,636			8,982			(273	)		25,345			19,422			8,730			(265	)		27,887			3,008			1,352			(41	)		4,319
YOY
Cost of revenues																										42	%		1	%					21	%
Selling, general and administrative																										40	%		(1	%)					29	%
Research and development																										34	%		2	%					30	%
Cost and expenses																										39	%		0	%					25	%
Operating income (loss)		4,966			(1,282	)		(40	)		3,644			3,847			(1,014	)		(44	)		2,789			4,619			(1,122	)		(34	)		3,463			715			(174	)		(5	)		536
YOY																										(7	%)		(12	%)					(5	%)
QOQ																										20	%		11	%					24	%
Operating margin		26	%		(17	%)					14	%		19	%		(13	%)					10	%		19	%		(15	%)					11	%
Add: total other income (loss), net		507			(141	)		—			366			23,999			(222	)		—			23,777			(2,204	)		(226	)		—			(2,430	)		(341	)		(35	)		—			(376	)
Less: income tax expense		1,206			16			—			1,222			1,513			21			—			1,534			2,167			30			—			2,197			336			5			—			341
Less: net (loss) income attributable to NCI		(157	)		3			(637	)(3)		(791	)		(21	)		10			(610	)(3)		(621	)		76			19			(676	)(3)		(581	)		11			2			(104	)(3)		(91	)
Net income (loss) attributable to Baidu		4,424			(1,442	)		597			3,579			26,354			(1,267	)		566			25,653			172			(1,397	)		642			(583	)		27			(216	)		99			(90	)

13

	Three months ended June 30, 2020 (RMB)										Three months ended March 31, 2021 (RMB)										Three months ended June 30, 2021 (RMB)										Three months ended June 30, 2021 (US$)
	Baidu						Elim &	Baidu,			Baidu						Elim &	Baidu,			Baidu						Elim &	Baidu,			Baidu					Elim &	Baidu,
	Core			iQIYI			adj(2)	Inc.			Core			iQIYI			adj(2)	Inc.			Core			iQIYI			adj(2)	Inc.			Core		iQIYI			adj(2)	Inc.
YOY																						(96	%)		(3	%)			—
QOQ																						(99	%)		10	%			—
Net margin		23	%		(19	%)			14	%		129	%		(16	%)			91	%		1	%		(18	%)			(2	%)
Non-GAAP financial measures:
Operating income (loss) (non-GAAP)		6,482			(837	)			5,605			5,064			(658	)			4,362			6,467			(780	)			5,653			1,002		(121	)			876
YOY																						(0	%)		(7	%)			1	%
QOQ																						28	%		19	%			30	%
Operating margin (non-GAAP)		34	%		(11	%)			22	%		25	%		(8	%)			16	%		27	%		(10	%)			18	%
Net income (loss) attributable to Baidu (non-GAAP)		5,656			(956	)			5,082			4,870			(1,021	)			4,297			5,942			(1,065	)			5,359			920		(164	)			830
YOY																						5	%		11	%			5	%
QOQ																						22	%		4	%			25	%
Net margin (non-GAAP)		30	%		(13	%)			20	%		24	%		(13	%)			15	%		25	%		(14	%)			17	%
Adjusted EBITDA		7,771			(716	)			7,015			6,487			(543	)			5,900			7,991			(662	)			7,295			1,238		(103	)			1,130
YOY																						3	%		(8	%)			4	%
QOQ																						23	%		22	%			24	%
Adjusted EBITDA margin		41	%		(10	%)			27	%		32	%		(7	%)			21	%		33	%		(9	%)			23	%

(1) Includes share-based compensation as follows:

Cost of revenues	49	59	108	33	46	79	69	43	112	117		18
Selling, general and administrative	331	219	550	256	215	471	274	209	483	43	32	75
Research and development	1,102	86	1,188	866	83	949	1,443	78	1,521	224	12	236
Total share-based compensation	1,482	364	1,846	1,155	344	1,499	1,786	330	2,116	278	51	329

(2) Relates to intersegment eliminations and adjustments

(3) Relates to the net loss attributable to iQIYI noncontrolling interests

14

Baidu, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions,unaudited)

	Three months ended June 30, 2020 (RMB)									Three months ended March 31, 2021 (RMB)									Three months ended June 30, 2021 (RMB)									Three months ended June 30, 2021 (US$)
	Baidu excl. iQIYI			iQIYI			Baidu, Inc.			Baidu excl. iQIYI			iQIYI			Baidu, Inc.			Baidu excl. iQIYI			iQIYI			Baidu, Inc.			Baidu excl. iQIYI			iQIYI			Baidu, Inc.
Net cash provided by (used in) operating activities		9,547			(1,358	)		8,189			5,467			(1,350	)		4,117			9,362			(1,426	)		7,936			1,450			(221	)		1,229
Net cash (used in) provided by investing activities		(8,854	)		1,144			(7,710	)		(4,579	)		(2,778	)		(7,357	)		(12,220	)		58			(12,162	)		(1,893	)		9			(1,884	)
Net cash (used in) provided by financing activities		(2,211	)		823			(1,388	)		18,018			611			18,629			5,256			801			6,057			813			124			937
Effect of exchange rate changes on cash, cash equivalents and restricted cash		26			(10	)		16			251			(29	)		222			(342	)		(92	)		(434	)		(53	)		(14	)		(67	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(1,492	)		599			(893	)		19,157			(3,546	)		15,611			2,056			(659	)		1,397			317			(102	)		215
Cash, cash equivalents and restricted cash
At beginning of period		18,089			4,681			22,770			25,599			10,941			36,540			44,756			7,395			52,151			6,933			1,145			8,078
At end of period		16,597			5,280			21,877			44,756			7,395			52,151			46,812			6,736			53,548			7,250			1,043			8,293
Net cash provided by (used in) operating activities		9,547			(1,358	)		8,189			5,467			(1,350	)		4,117			9,362			(1,426	)		7,936			1,450			(221	)		1,229
Less: Capital expenditures		(797	)		(57	)		(854	)		(1,438	)		(61	)		(1,499	)		(2,435	)		(61	)		(2,496	)		(377	)		(9	)		(386	)
Free cash flow		8,750			(1,415	)		7,335			4,029			(1,411	)		2,618			6,927			(1,487	)		5,440			1,073			(230	)		843

Note: Baidu excl. iQIYI represents Baidu, Inc. minus iQIYI’s consolidated cash flows.

15

Baidu, Inc.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

(In millions except for per ADS information, unaudited)

	Three months ended June 30, 2020 (RMB)									Three months ended March 31, 2021 (RMB)									Three months ended June 30, 2021 (RMB)								Three months ended June 30, 2021 (US$)
	Baidu Core			iQIYI			Baidu, Inc.			Baidu Core			iQIYI			Baidu, Inc.			Baidu Core		iQIYI			Baidu, Inc.			Baidu Core		iQIYI			Baidu, Inc.
Operating income (loss)		4,966			(1,282	)		3,644			3,847			(1,014	)		2,789			4,619		(1,122	)		3,463			715		(174	)		536
Add: Share-based compensation expenses		1,482			364			1,846			1,155			344			1,499			1,786		330			2,116			278		51			329
Add: Amortization and impairment of intangible assets(1)		34			81			115			62			12			74			62		12			74			9		2			11
Operating income (loss) (non-GAAP)		6,482			(837	)		5,605			5,064			(658	)		4,362			6,467		(780	)		5,653			1,002		(121	)		876
Add: Depreciation of fixed assets		1,289			121			1,410			1,423			115			1,538			1,524		118			1,642			236		18			254
Adjusted EBITDA		7,771			(716	)		7,015			6,487			(543	)		5,900			7,991		(662	)		7,295			1,238		(103	)		1,130
Net income (loss) attributable to Baidu		4,424			(1,442	)		3,579			26,354			(1,267	)		25,653			172		(1,397	)		(583	)		27		(216	)		(90	)
Add: Share-based compensation expenses		1,473			364			1,676			1,146			344			1,325			1,777		330			1,947			275		51			302
Add: Amortization and impairment of intangible assets(1)		27			81			79			55			12			61			55		12			62			9		2			10
Add: Disposal loss (gain)		495			—			495			—			—			—			—		(45	)		(28	)		—		(7	)		(4	)
Add: Impairment of long-term investments		772			49			800			—			—			—			205		2			206			32		—			32
Add: Fair value (gain) loss of long-term investments		(2,754	)		—			(2,754	)		(23,545	)		(88	)		(23,590	)		3,180		(9	)		3,175			493		(1	)		491
Add: Reconciling items on equity method investments(2)		1,191			10			1,197			593			(20	)		583			190		32			207			28		5			31
Add: Tax effects on non-GAAP adjustments(3)		28			(18	)		10			267			(2	)		265			363		10			373			56		2			58
Net income (loss) attributable to Baidu (non-GAAP)		5,656			(956	)		5,082			4,870			(1,021	)		4,297			5,942		(1,065	)		5,359			920		(164	)		830
Diluted earnings (loss) per ADS								10.31									73.76								(1.70	)							(0.26	)
Add: Accretion of the redeemable noncontrolling interests								0.07									0.14								0.02								—
Add: Non-GAAP adjustments to earnings per ADS								4.35									(61.52	)							17.09								2.65
Diluted earnings per ADS (non-GAAP)								14.73									12.38								15.41								2.39

(1) This represents amortization and impairment of intangible assets resulting from business combinations.

(2) This represents Baidu’s share of equity method investments for other non-GAAP reconciling items, amortization and impairment of intangible assets not on the investee’s books, accretion of their redeemable noncontrolling interests, and the gain or loss associated with the issuance of shares by the investees at a price higher or lower than the carrying value per shares.

(3) Tax impact of non-GAAP adjustments is separately presented from 2020Q4, with comparative periods retrospectively adjusted.

16