On August 14, Beijing time, baidu (NASDAQ: BIDU) released its unaudited second quarter financial report as of June 30, 2020. According to the financial report, in the second quarter of 2020, the total revenue reached RMB 26 billion (US $3.69 billion), a year-on-year decrease of 1%. Online%, thanks to the growth of iqiyi members and Baidu’s cloud computing and intelligent transportation solutions. The revenue from Baidu core reached 18.9 billion yuan (US $2.68 billion), down 3% year on year. Iqiyi’s revenue reached 7.4 billion yuan (US $1.05 billion), up 4% year-on-year. Iqiyi’s member income increased by 19% year-on-year, but was partially offset by% online. In the second quarter, Baidu’s average profit was lower than 7% in the second quarter of the US stock market. < / P > < p > on the one hand, the revenue increased steadily, with a 15.7% month on month increase, to 26.03 billion yuan, of which Baidu’s core rebound was obvious, with an increase of 24% compared with the previous quarter. On the other hand, the operating profit (non GAAP) was 5.6 billion yuan, with a year-on-year increase of 187%, and the net profit (non GAAP) was 5.08 billion yuan, with a year-on-year increase of 40%. According to the above chart, Baidu’s profit level in the second quarter reached the second highest level in the past two years (2019-2020). In response, Yu Zhengjun, chief financial officer of Baidu, said: “in the second quarter, baidu core’s profit margin before depreciation and amortization after interest rate adjustment reached 41%, mainly due to the steady growth of new business of Baidu app and AI.” < p > < p > according to the financial report, the revenue cost was RMB 13.1 billion, down 19% year-on-year, mainly due to the reduction of transportation purchase cost, business tax and surcharges, and the cost of goods sold. In addition, sales, general and administrative expenses were 4.4 billion yuan, down 16% year-on-year, mainly due to the decrease in marketing and personnel related expenses. In terms of cost control, Yu Zhengjun said at the second quarter financial report telephone conference, “we will be more cautious in marketing expenditure, for example, we may reduce investment in promotion activities and pre installed applications, because the sales of smart phones have also declined. Of course, if a certain department does have a very high return on investment, it will continue to purchase. At the same time, with the gradual restart of the economy, there will be more recruitment in the third and fourth quarters, and the relevant budget of the company will also be increased. ” < p > < p > in terms of cash flow, as of June 30, cash, cash equivalents, restricted cash and short-term investment were 154.1 billion yuan, and 144.6 billion yuan, respectively. Free cash flow was RMB 7.3 billion, excluding iqiyi, which was RMB 8.8 billion. < / P > < p > it is worth noting that the total other income in the quarter was RMB 366 million, a significant decrease of 70% year-on-year. In this regard, Baidu said that this is mainly due to the equity method investment loss, which is recorded quarterly, reflecting the impact of covid-19 on the investee. < p > < p > in the last quarter, Baidu’s online marketing business was seriously affected by the epidemic, with only 14.2 billion yuan. With the relief of the epidemic, the business grew as scheduled in the second quarter, reaching 17.7 billion yuan. But even if the level of online billion yuan is just catching up with the level in the first quarter of last year. < / P > < p > it is reported that the growth of online marketing is mainly due to the rapid progress of the three pillars of mobile ecology and the marketing cloud service platform, which makes the internal revenue of Baidu app achieve adverse growth for two consecutive quarters. As can be seen from the above figure, Baidu’s online marketing revenue in the first quarter of the past three years has been at the lowest level of the year. However, in the first quarter of this year, due to well-known reasons, this business appeared again, reaching a new low in nearly three years. On the other hand, from the change of the proportion of online marketing revenue in total revenue, it can be seen that after 2020, this proportion has been reduced to less than 70% under the condition of continuous decrease. However, the data rose again in the second quarter compared with the first quarter, breaking the downward trend for six consecutive quarters. < / P > < p > at the same time, other businesses (including new AI business, iqiyi member income and cloud computing business) that Baidu placed high hopes on brought in revenue of RMB 8.3 billion in this quarter. Coincidentally, this is completely consistent with the revenue of last quarter. Obviously, the total revenue of these businesses is still in place, and Baidu’s revenue growth in this quarter is still the online marketing business belt Come on. < / P > < p > huwen noted that in the last quarter, the growth of “other businesses” was mainly due to the strong growth of iqiyi members, cloud services and smart devices (small speakers). At that time, as a beneficiary of the “home” economy, iqiyi’s member income increased by 35% year-on-year, offsetting the online% situation. < / P > < p > although in the second quarter, iqiyi’s member revenue remained strong, with a year-on-year growth of 19%, but the decline in online advertising revenue continued, at 28%. In contrast, iqiyi’s performance can only be regarded as stable, not brilliant.
and this quarter, Baidu CEO Robin Li mainly emphasized the two digit growth of Baidu’s new AI business, including cloud, smart devices and intelligent transportation, and is expected to become an important driving force for revenue growth in the next few years. However, it is a pity that Baidu did not disclose the revenue brought about by AI’s new business in this financial report. In fact, Google, as a search giant, is facing the same problems. What’s different is that by the second quarter of this year, the proportion of its advertising business in total revenue has decreased for five consecutive quarters. At the same time, the revenue of its cloud computing business has also increased significantly, up 43% year-on-year to US $3.007 billion. < / P > < p > it is not difficult to find that in the short term, baidu benefited from the recovery of the epidemic, hit the bottom in the second quarter, and its revenue and profit performance exceeding expectations also brought some confidence to Baidu. Compared with the “worst performance” delivered by Google, baidu is obviously lucky. However, in the long run, this growth mainly comes from the contribution of online marketing revenue, while the growth of other businesses disclosed by Google is obvious, especially the growth of Google cloud computing, which has surpassed Amazon and Microsoft in the second quarter. In this way, the effect of Baidu to B transformation seems to have not yet appeared, it is not difficult to speculate that this will be Baidu’s hidden worry for some time in the future. < / P > < p > for the next quarter, baidu believes that due to the impact of Xinguan epidemic, its business visibility is very limited and there is great uncertainty. As a result, baidu expects revenue in the third quarter to be between 26.3 billion yuan (US $3.7 billion) and 28.7 billion yuan (US $4.1 billion), representing a year-on-year increase of – 6% to 2% (assuming Baidu’s core revenue will grow by – 7% to 3% year-on-year).