Can baidu, a slimming and optimized company, return to bat?

More than 800 live broadcasts have been organized in the app, trying to attract users through a large number of short knowledge videos and live content, and increase the usage frequency and stay time of the app. Today, baidu released its unaudited financial report for the second quarter of fiscal year 2020 as of June 30. The total revenue in the second quarter was 26 billion yuan, down 1% compared with the same period last year, and increased by 15% compared with the same period last year; the net profit attributable to Baidu was 3.6 billion yuan, up 48% compared with the same period last year. Baidu’s operating profit in the second quarter was 5.6 billion yuan, not in accordance with US GAAP. In terms of revenue structure, Baidu’s network marketing revenue in the second quarter was 17.7 billion yuan, down 8% compared with the same period last year, but increased by 15.7% compared with the previous quarter. Other revenue of Baidu in the second quarter was 8.3 billion yuan, up 18% compared with the same period last year, mainly due to the growth of iqiyi member services, baidu cloud services and its business. Among them, iqiyi’s revenue was 7.4 billion yuan, accounting for 89%. < / P > < p > overall, Baidu’s financial data in the second quarter are basically in line with the previous market expectations, and the value transformation brought by new AI business is gradually emerging. However, perhaps affected by iqiyi’s investigation by the US Securities Regulatory Commission, Baidu’s share price did not rise but fell after the financial report was released. < / P > < p > in addition, it is worth noting that Baidu is the only one with a revenue decline among the several giant companies that have published financial reports in the past few days. In the first quarter, people affected by the epidemic were isolated at home. During this period, Baidu’s revenue decreased by 7% year-on-year. In the second quarter, the revenue was still in a state of decline, but the range was not large. < / P > < p > although it is gradually moving towards a better direction, the new giants are fast. If Baidu wants to return to bat, it still needs AI and other aspects to show stronger new growth. < / P > < p > on the one hand, baidu app attracts and adds a large number of knowledge related short videos and live broadcast content in content, increasing users’ usage frequency and staying time, and connecting Baijia account with Baidu knowledge products, and connecting good-looking video with iqiyi number; on the other hand, it online third-party local life service function, and strengthens community construction and interaction. < / P > < p > on the basis of the three pillars of mobile ecology, baidu tries to bid farewell to the traditional search engine experience by aggregating more content and services, and strides forward towards its ambition to be a super app. < / P > < p > to a certain extent, with the rich content and service forms, it is easy to explore the diversified realization path. However, when Baidu app becomes large and miscellaneous, whether the user experience will be better remains to be seen. Among them, Baidu’s revenue cost in the second quarter was RMB 13.1 billion, down 19% compared with the same period last year, mainly due to the decrease of flow acquisition cost, sales tax and surcharges, and cost of selling goods. < p > < p > Baidu’s sales, general and administrative expenses in the second quarter were 4.4 billion yuan, down 16% compared with the same period last year, mainly due to the decrease in marketing expenses and personnel related expenses. In the second quarter of 2020, Baidu’s costs and expenses were 22.39 billion yuan, 14% lower than 26.093 billion yuan in the same period of last year, and 3% lower than 22.982 billion yuan in the previous quarter. < p > < p > Yu Zhengjun said that if the revenue is not easy, the company will be more cautious in marketing expenditure, for example, it may reduce investment in promotion activities and pre installed applications, because the sales of smart phones have also declined. Of course, if there is a very high return on investment, we will continue to purchase. < p > < p > he expects that with the gradual restart of the economy, companies will increase recruitment and related budgets. Robin Li expects in the conference call that in the next quarter, according to the non GAAP, the sales and operating expenses of Baidu’s core business will increase by 10%. In the first quarter of 2020, due to the impact of the epidemic, Baidu’s advertising revenue decreased by nearly 20% year-on-year, and the revenue of 14.2 billion yuan was the lowest since Q2 in 2015. In the conference call, Yu Zhengjun said that the year-on-year decline of medical business was still more than double-digit, but the situation of month on month recovery was very good. It is expected that the medical business will recover to the level of last year in the third quarter at the current speed. “Some other businesses have the same trend, so our forecast for the year-on-year growth of revenue in the third quarter is higher than that in the second quarter.” < p > < p > in the last quarter, the proportion of online marketing revenue in total revenue was reduced to less than 70%. However, the data rebounded in the second quarter, breaking the previous downward trend. The decrease in the proportion of advertising revenue reflects Baidu’s weakness in core search advertising revenue on the one hand, and on the other hand, it also reflects Baidu’s search for diversified cash flow ways to get rid of advertising dependence. Among them, the new business of AI is a key quantity. < / P > < p > “we believe that the non advertising business will become an important driving force for the company’s growth in the future, with an increasing proportion and an increasingly important role in driving the overall performance of the company.” In the financial report conference call, Yu stressed the importance of non advertising business. Robin Li also mentioned that AI’s new business revenue grew by two digits in the second quarter, which is expected to become an important driving force for revenue growth in the next few years.

has revealed that Baidu’s Intelligent Cloud business revenue reached 2 billion yuan in the quarter, and small smart speakers and intelligent transportation also contributed. According to Sa’s preliminary forecast, the shipment volume of Xiaodu in the second quarter is the first in China. In June, the number of voice interaction between the first party equipment of small assistant reached 2.8 billion times, nearly double that of the same period last year; the total number of voice interaction of small assistant reached 5.8 billion times, an increase of 57% over the same period of last year! However, among other revenue of 8.3 billion yuan, iqiyi’s revenue was 7.4 billion yuan, accounting for 89% of the total. The contribution of new AI services such as Baidu cloud service and intelligent transportation solutions business is still small, and it needs to be accelerated to become an important driving force in a real sense. < / P > < p > the impact of the epidemic also forced the acceleration of AI commercialization to a certain extent, and the growth of Baidu AI new business and iqiyi business including smart cloud and Xiaodu. < / P > < p > although AI is playing its role and AI business income is growing, it will take a long time and a long period for AI to become the core of Baidu’s growth. At this stage, it still needs a large amount of investment. < / P > < p > on the one hand, the search field is forming a new competitive situation. Last month, Tencent made a preliminary non binding offer to Sogou. Once the transaction is completed, Sogou will be delisted and become a wholly-owned subsidiary of Tencent. < / P > < p > in fact, prior to this, Alibaba innovation business group established the intelligent search business department in June, focusing on the layout of the previously launched intelligent search app quark. Today, wechat has also developed from in app search at the beginning to Sogou providing off-site search service. Later, it has established its own “search application department” to make wechat search business independent. Based on Tencent’s open cooperation ecosystem, such as Kwai Fu, know about, Jingdong platform, and small program services, Tencent’s search business also bears the heavy responsibility of firmly grasping the entrance. < / P > < p > search engine is the most important access for users to obtain information. With the advent of mobile Internet era, various vertical mobile apps have separated some obvious target users and traffic. < / P > < p > If Tencent acquires Sogou, it will further expand PC’s search share through wechat search content and return to the search market. This is a lot of pressure for Baidu. In response to relevant questions on the conference call, Yu Zhengjun said that the positioning of products is different. Wechat is a social network, the role of social network is to connect users together, but the purpose of search is to connect people with specific content (text, photos, video). When people use social networks, they want to get the latest news and information quickly; when they search, they are more interested in a certain topic. < / P > < p > “so when social media apps build more search capabilities, they can really do a particularly good job in search. But they lose their social function. So the question is really about whether Tencent wants to make it more search centric, because once they do, it will open the door to other companies that want to build better social products. ” According to Yu Zhengjun. < p > < p > on the other hand, iqiyi’s poor performance and the decline of advertising business also affected Baidu’s overall revenue. Previously, in order to focus on the main channel, baidu repeatedly stripped off the edge business, such as where to replace Ctrip shares, o2o business. < p > < p > earlier, it was reported that Tencent holdings had contacted Baidu to discuss the acquisition of iqiyi shares, and planned to become the largest shareholder of iqiyi. Today, Yu Zhengjun said that Baidu, as a member of the parent company, was not directly involved in the independent investigation. Do not comment on relevant issues.