Q1 2022 Baidu Inc Earnings Call
Hello, and thank you for standing by for Baidu first quarter 2022 earnings conference call. At this time all participants are in listen only mode. After management prepared remarks, there will be a question and answer session. Today's conference is being recorded if you have any objections you may disconnect.
At this time I would now like to turn the meeting over to your host for today's conference Jennings Baidu.
Director of Investor Relations.
Hello, everyone and welcome to Baidu is we thought it was going to.
Earnings Conference call.
The earnings release.
Debuted it earlier today and you can find a copy all websites as well as Amit said if it on the call today. We have you all didn't meet our co founder and CEO Neil Doshi.
Ocean, our EVP in charge of Baidu AI Exalt D E P T.
Oh, I think he and tragic by being intelligent driving up all the prepared remarks.
Hold a Q&A session. Please note that the discussion today will contain forward looking statements made under the safe Harbor provision at that kind of Securities Litigation Reform Act.
Why.
These statements are subject to risks and uncertainties that may cause actual results.
What materially from our current expectation could you check discussion of beaches and uncertainties. Please refer to our latest annual report.
And the other doesn't bother me too I think.
Exchange Baidu is definitely untrue.
Take any obligation to update any forward looking statement, except as required under applicable law.
Especially and this call includes discussions, especially in another.
non-GAAP financial measures.
Press release contains a reconciliation of the unaudited non-GAAP measures to the eye.
Okay.
The comparable GAAP measures and is available on our IR website at IR <unk> com.
Neither this call is being recorded in addition.
This conference call will be available on Baidu.
Right.
I'll now turn the call over to our CEO Robin.
Hello, everyone.
Delivered solid first quarter results driven by the continued upstream argued D I b.
More specifically revenues from Baidu AI cloud increased by 45% year over year.
We achieved a new wings for Apollo self driving or E from automakers during the corner validating our confidence in the solution.
Okay.
A poll Gulf ninth groundbreaking.
We won the first pardon me in China will probably.
Lifesaving services on Oppo and vivo.
Will further fortify our unquestionable leadership in the Robo taxi market.
Like many other companies in China seems to be March arpin as being negatively impacted by any measure.
To extend but our hope at Nike.
But.
That's it.
Particularly the recovery of our Aspen and implementation of some projects have been delayed.
In the near term the challenges related to the virus continue to call on.
So exactly involvement and pressure are beneath the operation.
Looking beyond the near term, we believe the Chinese economy, and Baidu, Sydney, well, bringing promising for the Mi.
Two long term.
We expect our absolute to recuperate, one overall economic return.
Peter.
In the meantime to enable our long term goals, we will continue to proactively and prudently in our new AI had been include.
Including Baidu AI call, Oh logo and E S P.
Most notably our new AI businesses are well aligned with China's priorities E Tech the innovation marine transmission and digital economy.
The U S.
<unk> being repeatedly emphasized by top official national events, including the recent meeting convened by China Chinese People's political Consultative conference.
The application.
In China.
And with that the long term growth prospect of Baidu.
We think there's opportunities to use technology to accelerate the development of the economy.
Oh foundations, whereas sectors, such as energy and utilities.
Any factory finance and the public sector.
Come to realize that not only do they need to digitize what they do they can also use all kinds of AI technology to enhance our competitiveness through cost reduction.
We should see improvement.
So the demand for Digitization.
I come at the same time.
That person.
Neat opportunity for us to deliver Baidu AI cloud solution in a seamless way.
In addition, Baidu <unk> smart transportation supports our contributions to the green economy.
According to China Academy of Transportation volume off the Ministry of Transport Baidu Acu project.
Walgreens study, reducing its carbon dioxide output by 24 1000, Paul annually.
Which is equivalent to more than 240000 feet.
As more and more cities adopt the Baidu <unk> Smart transportation, we believe we will meet increasing distributions to reduce carbon emissions.
Technology.
And to fulfill our commitment to the environment and decide.
Now, let's review the first quarter operational highlights.
Baidu AI cloud maintained its fast growth momentum benefiting from digital and intelligent transformation.
Traditional industry and the public sector.
F our cutting edge.
Got it.
Over the past quarter, we have achieved rapid revenue growth and emphasize.
The quality of growth.
If he wishes.
In cloud, we have a wide range of high powered applications and tools that can generate all that.
The goal and the scalable AI solution in industries, such as the public sector energy and utilities health care as well as transportation.
By doing so we are working hard to shorten our project implementation time, and we believe we will be able to also improve our margins over the long term.
One example is how we bring AI to the public studies.
Last year, we talked about how we use AI to build smart city together.
The nuclear policy health.
How can you improve the cities safety efficiency convenience and environmental quality.
By studying locker cities, such as young Baidu AI cloud huh standardized.
AI solution that many other cities our districts.
And at that.
This year was one of the southern district of Columbia.
But he began adopting our AI solution to keep the region.
Clean comp.
Compared to the lead young project, we managed to reduce the development time of our Smart City project is 50%.
Another example is in the energy and utility sector.
We empowered central water company to deploy our AI solutions ball predicting water consumption and automatically adjusting water right.
By forming a triangle, we established we have.
Established a set of AI solution.
The water industry quickly driving our business is scaling.
In March we won a project from the water company off the five even just kicked off Phil one of the largest cities in China.
And also in similar solutions to triangle, we also viewed additional AI solutions to help customers improve wastewater treatment and flood control in the region.
Given the expanded scope of filing district off Guangzhou This contract alone while we bought all the five of the Trimble project.
Turning to <unk> Smart transportation.
By the end of the first quarter Baidu AC has been adopted by 41 cities up from 16 cities a year ago, and 35 cities a quarter ago based on the contract of over RMB 10 million.
Leveraging our AI capabilities to synergize, a vast amount of real time data from multiple sources Baidu AC. He has helped increase traffic management efficiency.
According to <unk>.
Yeah, we saw from the Beijing high level automated driving demonstration area.
We're trying to fix though as the intersection has improved by 28%. Thanks to our <unk> Smart transportation solution aims at each one region.
Going forward, we continue to aim at above industry growth.
I call. It then.
And target long term quality revenue and sustainable growth.
The near term headwinds caused by the COVID-19 control measures.
Moving to intelligent driving we continue to grow our deal pipeline is auto OEM.
Uh huh.
For the provision of our ESP solution.
In particular for our polo navigation pilot A&P. According to our internal estimates recently, the total projected accumulate itself, although solution, including E. S. P. N Dor O asphalt, although surpassed RMB 10 billion.
Yeah.
After winning a partnership with BYD at the beginning of the year.
We received a nomination letter from.
Motor, which is the top three domestic automaker.
And hence to adopt our <unk>.
E M E N V P.
And HD map in one of its popular auto model.
The smart lighting and smart connectivity is gaining popularity and so you don't have in.
In House development is costly and time consuming automakers are increasingly interested in adopting our intelligent driving solutions to capture this new trend.
As a result, we expect our yeah, Steve pipeline to keep going in the future.
Paul go achieve a major new milestone with the award of the first flight early like dealing with permits and China on public film.
On April 28, 24, new tool the Beijing high level automated writing demonstration area chip elite nationally one.
Specify the criteria and granted permit while providing poverty.
Right hailing services, Oh, no English from region Beijing.
Our polo golf became the first company to receive the permit.
We believe these approval indicate a regulatory openness.
Taking a further step towards our 40 fabric mobility future, allowing Apollo goal to further scale up operation.
In 2018, we became the first company to launch those testing autonomous driving.
Uh huh.
In the fourth quarter 2020, we wanted the project.
Debuted atheist smartphone cohesion and introduce our autonomous ride hailing services English definitely.
The area of Beijing.
By doing so we have taken a more holistic approach to intelligent mobility, which sympathised are AC eat smart transportation solutions.
Vehicles mass and club for the state.
This approach has allowed us to better overcome the complexity and high density urban Tropic in Beijing.
Last year, our whole goal was authorized to conduct celebrities testing on open road and put like paid upon the ride hailing stomach that.
April we were allowed to provide privately ride hailing services Oh no to passengers.
All our safety side, both behind the theory well.
This rapid departure minutes reflect the government's recognition of our proprietary technologies and operational capability.
In the future we plan to replicate that he's on case to other cities.
Most recently, we were authorized to conduct primarily from testing Oh no intention following the permit for our polo golf two charts passengers all figure out three months ago.
We are happy to note that our Pogo continues to hold a leading position in the global autonomous ride hailing market.
During the fourth quarter, we provided 196000 right.
Over 11 times from a year ago.
The number of rides dropped by 8% quarter on quarter, mainly due to the COVID-19 controlled measured since the beginning off with year and weak seasonality.
In terms of geographic coverage Hello go further advanced into 10 cities in China.
Well many of our services Baidu has worked hard to meet the.
Technical challenges all China's complex.
Traffic environment. It is important to note that fact, serving passengers on a daily basis and a much wider scale. We have detected problems that have been Oh no. This bowl during the testing phase.
Furthest eating up the development of our autonomy.
Driving technology.
Looking ahead, we are confident.
In maintaining our absolute market leadership in intelligent driving.
Demonstrated by the ongoing growth of E. S P deals pipeline and scaling of the Colorado operation.
Now briefly updating you on doing that.
So I'll do some retains the top ranking for Amy.
Smart display and smart speaker shipments that we have provided in previous quarters and revenue continued to grow rapidly.
Moving to mobile ecosystem Baidu.
Baidu app users and traffic growth remained solid.
In March and May yield increased by 13% year over year to 632 minutes and daily logged in users continued to trend up reaching 83%.
Both in App search queries and daily content distributed I feed achieved double digit year over year growth.
Baidu Smart mini program and have you reached 500 million Mark up 22% from a year ago.
Well, our mobile ecosystem continue to fly we persistent in our efforts to innovate and improve user experience.
In videos daily short videos distributed by Baidu, App, including both search and feed enjoyed accelerated year over year growth to over 25% in March enabled by the fully immersive video experience. We introduced at the end of last year.
Yeah.
In services over 100000 industry participants sign up for instantly flag feature in March up from about 44000 in December .
Total daily intended with five increased by almost six times year over year in March up about 20% from last December .
That's China's mobile Internet matures apps and mobile platform are eager to acquire traffic.
Notable cost.
We have observed that many vertical either.
Local service provider that has made a lot of money and malia choose to deepen with your collaboration with Baidu App.
People are making offers to our users.
This has resolved it he noted notable increases in user engagement and transaction for the smart mini program on Baidu.
E Commerce.
N V facilitated by Baidu search.
Small roll about 14 times year over year in the quarter.
The above mentioned innovation fan steps forward.
Are the latest in our transformation from information starts to delivering close to user experiences, which enabled us to strengthen our mobile ecosystem around search.
Going forward, we will continue to work hard on maintaining stable margins for the mobile ecosystem and finally, our investment in the new year.
Despite the near term headwinds.
With that let me turn the call over to Don to go through our financial highlights.
Thank you Robyn.
Now, let me walk through our first quarter financial yourselves.
Baidu core revenue was RMB 28.
I'll address the others.
What's the thought in your overview.
Baidu Costco or revenue.
Thank you for that I'll address those three points booked today.
Well perfect.
No advertising provider coverage.
So having said that 75% year over year.
Contract bookings et cetera.
Baidu pulse revenue upfront you want.
No.
Cloud revenue was.
45% year over year claw contributing almost 17%.
Right.
A huge revenue growth engine.
Oh, I'm asking that because you've grown up.
Thank you.
Many of our customers.
Two other customers.
Great.
Our business well and the prices.
Uh huh.
Is the driving force for revenue again, a chicken wrap it up.
Sure.
The revenue growth in key sectors, such as energy and utilities.
Public sector and the transportation revenue for himself, who got a nice solid quarter.
<unk> revenue was RMB 15.
So whether it's.
Crazy, 4% year over year with performance of our.
Highly correlated with the macro habit pattern.
So they could control massive.
None of our top industries, such as travel from Triton.
How do you stop them.
Okay.
On the flip side when people.
The COVID-19.
Tend to spend more time on other platforms in particular, the country Baidu app to check the amount of information molecule.
Which has positively contributed to our reviews and try to close.
Great respect.
To recover once the macro environment.
Bruce.
Two a widely diversified customer base that covers many industries in the Chinese economy.
<unk> revenue was RMB, seven 3 billion, increasing 9% year over year.
Average daily number of total Susquehanna members reached 100 million for the quarter.
What's your revenue was.
Person over here, mainly due to a really fun membership strategy.
Monetization capabilities.
Cost of revenue.
It's been faster than our corporate spend year over year, primarily.
The increase in cost of goods.
Chuck acquisition causes families.
And the other causes related to a new arpus.
Offset by a decrease in content costs.
Operating expenses were RMB.
The press release.
Increasing 1% year over year, primarily due to a deal.
Chris and channel spending promotional marketing.
Thank you.
non-GAAP operating in Congress on this.
All you have started some countries within whether non-GAAP operating margin was 14%.
Operating income for Baidu core was hardly three part of that.
Not all U S dollar fund.
non-GAAP operating margin for Baidu core was 17, one seven or something.
That's EBITDA.
In the first place, but better August dollars a passenger.
Seven minutes or so.
EBITDA margin was 19% while not ours.
Adjusted EBITDA for Baidu core was RMB five 1% of U S dollar drove five minutes.
Adjusted EBITDA margin for Baidu core was.
24%.
Cash and short term investments for Baidu call as of March 31st 2020 to close to RMB 105, possibly put in audio started Kinsey My press with it.
Free cash flow profile, excluding <unk> was RMB one one for the I'll just call. It 175 minute Baidu core approximate city could you.
So.
As of March 31st 2022, operator with that let's now open the call for questions.
Yeah.
Ladies.
You May now begin the question answer session, if you'll be used to ask questions, especially the one on your telephone and wait what's your name to be announced.
We used to cancel your request. Please press the pound all husky Ah the sponge I request that we speak one question each time.
Our first question comes from the line of.
Alicia Yap Citigroup. Please ask a question.
Hi, Thank you management, thanks for taking my questions congratulation on the solid set of results in the tough environment. My question is on the outflows. So all wonder can management give us some color.
What should we expect for your revenue trend in the second quarter and also the rest of the year. So in particular when do you expect the inflection point for your advertising business to happen given you know most of the offline spending is Colorado with the macro.
And then secondly, I'm not piece that you're all first quarter operating margin came in stronger and better than the market expected could you give us some color on how we should think about the margin outlook for the second quarter and also the rest of the second half.
Lastly, if I may just in light of the Lakers backhaul and I'm wondering if there's any change off I do long term strategy and the growth outlook. Thank you.
Thank you Alex This is Chris let me kind of first questions about their convenience.
I think that's as Robin mentioned in his script.
Prepared remarks, so you don't need much.
Claudia.
The Mexican peso.
Well, Michael I think which is different.
Different from the previous vibrant uncle.
Foster.
Men.
Prudent cost cities in China, like Shanghai and Beijing.
In the past already locked in over two months.
Still ongoing in China.
This is lasting much longer.
This is al.
These subjects.
So the cold coffee situation is more severe than early March.
Oh man.
The activities have been significantly dropped.
Roughly.
It has been Mexico.
Also what happened with yields the best travel because of the COVID-19.
The registration.
This also caused a negative impact.
Would you be.
Especially what I'd call soybean prices public status because of we have to postpone some of the deployments.
Crop projects.
So taking into consideration all these factors.
I think.
Compared to the first quarter, the second quarter will be more challenging for us.
As for the industry.
Wade.
Relatively limited visibility for the second half.
At this stage.
Sure.
Depending on the policy.
The only other thing.
Also happy to see that.
Recently, the Chinese government has released.
Clear.
Support and content development.
The digital economy.
No.
So we're continuing to closely monitor the development of the virus and the macro conditions.
Here I would like to emphasize.
That baidu has only advertising is widely diversified.
Congress many industries when they try it.
The Chinese economy.
We believe once there is a as well that's fun calling me.
I think that is.
Definitely benefit from start to recover.
Given the current macro.
Macro economy.
So we will be more to simply wait.
We're spending most of it.
For example, with you.
Prudent spending.
And in almost all of them.
With that say Oh, one side, we're continuing to see a lot of course potentials.
In April .
So we are determined to continue investing in these areas such a call.
The intelligent driving.
Business hiring and developing so far.
And on the other side no medical system.
Overall mobile and I'm not trying to make sure. It so we're proud of in the bathroom.
And the gross movies in Hollywood, and we will be more consistent with all of these investments here.
Uh huh.
On your long term strategy question and despite the near term challenges by this long term vision.
Then typically means unchanged.
We believe that our mobile ecosystem provides a unique value proposition for our users and our customers.
Yeah, well have reached the bar again and again.
Access in the years to come.
We will also continue to innovate.
When the crisis quickly search users.
It's tough group services Baidu App.
As you see that our noncash revenue now accounted for 27% of Baidu core that is up from 21% a year ago.
And within non AD, we believe our new AI businesses are.
And by the way that cloud and intelligent driving.
Well here is China skull and technology innovation digital economy.
Quintin transition.
This finishes have made enormous progress over the past quarter.
And Oh, well position to.
And capture.
The total addressable market.
Baidu AI cloud continuing to drive the digital and intelligent transformation.
China's traditional industry.
And the public sector.
So you'll see that our revenues from enterprise and public sector consistently off well that I'll call out here.
Intelligent and connected vehicles by becoming the.
New attraction in almost self.
Many automakers have come to realize that adopting baidu solution.
It's better than investing heavily in people that can be are being hospital chains.
And Apollo go already holds a leading position in the global autonomous like hitting the market and.
And we just won the first permitted in China like probably Spike hammering services.
I was in Beijing.
Uh huh.
In May we were allowed to conduct testing in Chongqing.
You can see our vision and our strategy remains the same we are an AI company with a strong Internet Foundation.
A lot of synergy between all of our businesses and our technology innovation.
So with that we are very confident in baidu with long term growth and stuff.
Yeah.
Thank you.
Yeah.
Thank you.
The next question comes from Lincoln call, Yes, He's asked a question.
Thank you management for taking my question. So my first question. Mr. If we saw the earlier you know the media reports.
Chinese People's political Consultative conference held a meeting in Beijing last week and probing you're one of the attendees Friday and that companies. So we're quite curious to learn what's the takeaway from the meeting and have you made any proposal high in the meeting.
And my second question is about the mobile so we noticed that the user growth was pretty strong for the Baidu App. So can you help us understand the underlying drivers of your user growth for the mobile ecosystem and how should we think about the.
User growth potential going forward.
Yeah.
Yeah regarding to the C. P P C.
Mhm menu senior government officials attending that meeting, but what's the name focusing on supporting a healthy and safe.
The pin involved about something of a digital economy.
All attendees are off the company could clearly feel the government support and openness for technology innovation and their willingness and determination to promote.
Development.
China digital economy.
Very notably investment in R&D highly appreciated and encouraged.
I basically talked about two points.
One I called out the importance of using AI to improve the efficiency.
For China's massive infrastructure.
Be it in transportation utility energy or telecommunications.
Do they kind of already has a very comprehensive infrastructure English the area.
But they have not yet been powered by AI authentic thing.
Martina.
Take the transportation industry.
An example.
Most of them, China traffic lights on Mount Holly by real time data from multiple sources.
And AI powered to be too at has not yet become fully available here.
Given the current transportation network and many local governments.
Have to implement strict risk kitchens purchasing and using vehicles.
We're swinging domestic consumption because of this.
AI enabled traffic light N V to X well help improve efficiency and reduce accidents.
Accidents.
So according to our estimate.
Intelligent transportation system could help improve efficiency by.
By 15% to 30%. This is not just asking me we actually have proven this.
With a number of cities in China.
So if we are fine with it.
We shouldn't see game.
To the entire transportation system, that's like a two.
2424, 0.8% additional annual GDP for the city.
So I believe that the intelligent.
Transport nation.
Could significantly lifting productivity.
Efficiency and.
Competitiveness.
History.
And also for the entire nation.
In my prepared remarks, I also shared examples of all of that.
Yeah Oh.
Too long beard.
And complex workloads.
Right.
And secondly, I also call for further regulatory support for Tech innovation.
For example.
More comprehensive industry regulation for autonomous driving.
No and in complex those condition.
Yeah.
Autonomous driving technology.
We've shaped in the auto industry to sort of extend our China beef in autonomous and fully traveling technology.
Well.
The adoption of autonomous driving vehicles in China.
Well increase the efficiency by.
Reducing traffic jams and accidents.
But before that we need to.
Make necessary adjustments.
To the Congress transportation law and.
You can see there's a profound changes that are driving that.
Even 45 are these cars can bring to China transportation system.
So to be more specific we need to set up regulatory standard for what is fabulous vehicles to be.
We issued our license plate.
You've got a whole thing goes and remove.
C fibers and charge passengers.
Also we need guidelines on how to identify responsibilities.
Accidents happen.
These proposals have been well received by the off the shelf.
Who attended the meeting.
Yeah and.
Visits to it I would tell you I spent my power mobile ecosystem.
I can see how small it just popcorn.
Our remarks in March.
I mean, you always ask what he says.
And the whole year and Baidu Smart mini program, maybe it was originally a 500 million Mark a cough was widely recognized as a go to tasteful cars information knowledge luxury wines envoys actually listening to a measure against the COVID-19 restrictions.
Many students.
Paul.
Oh, we have to bear as they come to Baidu app to search for all sorts of teeth.
So our cost related information and knowledge lately you would have been.
Significant increase of such subscribers the baby's discarded.
Asia relating to get worse or mobile increased cost per piece of debt.
So you're over here and so far what is.
That's the numbers in the second quarter.
More importantly, I think we will.
We will also continue to innovate.
And continuing to improve the user experience.
Batesville continues.
I see sure other such experiences driving consistent increase.
They're just producing.
But it's a tough market.
Hi, Andrew.
Our coffee.
And the second place that we're continuing to improve.
The close loop exploring.
In the coastal cities.
But you're right.
And with the widely used it I wish the metallic fuel services.
Nothing too.
<unk> expense for professional life through our building blocks I think for example in E Commerce journey, but forgive me if you backed by those fish grew by about 14 times one quarter.
Gotcha.
So around with the.
Monthly orders for local services, we can baidu app increased by over 200%.
<unk>.
No the users not only come into Baidu after such information.
Christian you also want to enjoy the close facilities over here.
The place where also made.
The promising progress adopting yourself video results.
Resource.
We are working very hard to capture opportunity.
Yeah, I think shouldn't you released new features we also won't in reaching our.
Video content portfolio by using AI to cost effectively generate a video conference.
Hodgkin continue children.
Variances and maintained healthy user growth. Thank you.
It's so much income.
Thank you, Rob and thank you to it.
Yeah.
Thank you. The next question comes from Gary Yu Morgan Stanley . Please ask your question.
Yes.
Hi, Thank you management for the opportunity and congratulations on a pretty resilient set of results I have some follow up questions regarding to AI cloud business.
The first one is on the outlook for the coming quarters. This is particularly because some of your peers have indicated some slowdown in cloud revenue growth. So I just wanted to see you know how we should expect baidu AI cloud growth going forward.
The second question is also related to that which is you know is that an update on our strategy and progress in terms of building standardized solutions.
Because I think this is important to improve your AI cloud margin going forward. So just wanted to see what's the progress there and how should we look at margin going forward. Thank you.
Hi, Garen.
Western states spanning from home.
Baidu AI cloud grew 45% year over year to RMB.
That's a good point 19 in Q1 and it contributed almost 70% of all five or a pull down on that revenue.
Baidu AI call basically includes two parts one is the personal cloud. The other is the classical enterprise and the public sector.
The rapid growth in cloud has been driven by the enterprise and public service sector.
For example, energy utilities Smart transportation.
Mark cities.
More.
Last quarter, our revenues from this portion growing much faster than the overall comp.
Got it.
We are confident that revenues from enterprise and public service sector.
Continue to drive the growth off by the way at cloud in the coming quarters.
As I mentioned earlier, we did notice that things May March this new round of COVID-19 divides quickly across many cities in China.
And as that plays out.
We had to reduce spend travel.
And postpone that deployment.
I apologize.
That being said, we think such a impact is just a temporal it looks.
Looking beyond the Covid impact we are confident about the unique positioning of our AI cloud.
The integration of cloud and AI enables our customers from many industries to make a significant productivity and efficiency gains through yeah.
The market potential is huge and we were just at the beginning of capturing a huge opportunities arising from the transformation.
China's traditional industries and a public service sector.
In terms of margin.
Cloud is still loss, making at the operational level, but we do have some positive Roth.
Margin and profit gross profit.
For our personal cloud, although it's a revenue growth has been little work in the enterprise and public sector. It should continue to generate decent margins going forward.
And for the club and for.
Nah enterprise and public sector.
The growth driver.
While overall, our yacht Club Avenue. This part of the business also enjoyed a positive gross margin.
A few quarters ago, we have already set as our priority.
Health of the business.
To make sure that we grow revenue both half speed.
And with quality.
We proactively identified our key industries other than the internet sector to explore the opportunities in AI path and fast.
And that's at the same time as we.
Accumulate more urine in each industry, we try our best to standardize our product and solution to further scale our business.
You know traffic light at <unk>.
Intersection in the city of final thing, it's not much different from a traffic light and the city of Guangzhou. So we.
We can at least to us.
Standardize the product just or solutions, our industry by industry first and.
Longer term I do think weekend viewed a.
A strong foundation to solve our problems in different industries are using more standardized.
Solutions or technology.
The recent departure of infusing AI, especially in large models.
Be it in language models, our vision, how forgive a new hope to solve.
All kinds of problems using that one large standard deep learning platform.
But going forward, if we look beyond the COVID-19 impact for the cloud and we continue to aim at high revenue growth and remain focused on quality and sustainable.
Sustainable revenue growth margin should gradually improve from there.
Yeah.
I think it was either.
Thank you.
Next question comes from James Lee Mizuho. Please ask your question.
Yes.
Great. Thanks for taking my questions here condo congratulations on Apollo go achieving the breakthrough of drivers driverless operation here.
Two questions relating to that first and is how do you expect the driverless technology to improve the curve.
Cost efficiency is that pretty consistent with what you guys laid out at the analyst day last year or are you ahead of schedule here. A second can you also elaborate your plants on scaling up the driverless autonomous ride hailing service. Thanks.
Yeah, as I mentioned earlier.
Scaling up operations allows us to improve the level four autonomous technologies faster and facilitate our goal of ultimately providing fully driverless strikes hitting services, Inc. A much wider region.
The number of sites provided by our polo golf has been growing exponentially.
So that's scalable operation a mixed us the largest Av homes by defeating service provider in the World in Q1 alone we provided almost 20000 right.
It's the data gathered from such large scale operation in real life, driving somewhere else, we kick a lot of operational experience.
To be more specific southern passengers every day has allowed us to identify problems that are not visible during the testing phase.
Highly confident that sterling passengers in real work.
Well not only speed up our operation expansion, but also ex salaries technology advancement.
And I think our strong recoveries technologies and capabilities will allow us to receive more regulatory greenlights.
This is very important for us to start the <unk>.
Thirdly, our population.
Our priorities.
Remains unchanged.
Getting off of our operation.
Improving our autonomous driving technologies.
And reducing the cost and expenses are our top priorities.
Nobody is proud to be the first company to receive permits to offer a ride hailing services, all things else being China capital.
Without a 50 driver behind the steering wheel that means a lot to us because oh.
First a regulation prompt and it's the first time that Oh, the government allow that really more of a safety driver from the driver's seat on public though in particular in an area all 460 square kilometers in Beijing.
<unk> highly complex Scribing involvement.
This month.
Regulatory breakthroughs in China all of them.
Industry, reflecting the government open attitude towards a 40 driverless operation in the future.
And secondly.
It demonstrates our.
Strong power and its technology and capabilities as we are in.
We.
The first thing to be granted the permit and then we started to use them right away.
On the cost side.
Maybe a coffee is one of the largest cost item. So one of the most critical steps.
To limit the call Tom.
Strike Haiti is to remove the safety driver and the car and not have a remote 50 driver.
Managing multiple vehicles simultaneously.
This will build a strong foundation to.
Allow us eventually remove 50 staff from the Tar and achieve 45 already supplied Halley is.
As the newly granted permits.
We are much closer to achieving that goal.
Once we are authorized to remove 50 staff the passenger seat complete peak, our cost per mile well be reduced significantly.
Scaling up.
Also helps to reduce the manufacturing costs.
And right now we are on the way to make our sixth generation.
Robo taxis.
In the future we aim to further expand our feet off because I'm really smart hailing vehicles.
I'm, hoping you know to more cities.
We believe we will achieve the goal.
To provide a.
Yeah.
Safer cheaper and more convenient mobility service.
To the public.
So in short to answer your question. Despite all the disruptions caused by COVID-19 are starting you know March trough. This year I think we are on track to achieve our goals also you know fully tragedies robo taxi.
Perfect.
Thanks, so much.
Thank you. The next question comes from Tien Ho Th capital. Please ask your question.
Hi, good evening, Robin wrong, and Jim Congratulations on a good set of results.
Related to our polo self driving business. So you mentioned that there were more when fully in your partnership with visa.
He said here could.
Could you please share some of the outlook with our backlog numbers for 2022 last quarter earnings you mentioned that that small can stop a billion. So I just want to get some updates on that the second one is related to what the trends are.
Got you.
Could you please elaborate that the cooperation with Samsung so in particularly in the how does the revenue model work and that's the question. Thank you.
Thank you Tim Let me take this question.
I think I'll, let intelligent and connected vehicles.
More and more popular.
And therefore also become a new attraction and also sits today.
Other uphold the Jarden business, which we've called it for sure.
Do you want to throw out a world class leader.
Leading our level four autonomous driving technologies.
So many automakers countries.
I'm trying to yours.
Our solutions were also to capture the beef trim off the value for Allergan.
Especially the larger auto makers.
And the multiple.
That for us.
In particular, the Aon piece that it wishes they call a pull them irritation pilot.
Which is our high value solutions for intelligent driving.
We believe working with this.
They also allow us to refine our product.
Since then.
I want to just use my teeth.
Which was really crazy adoption Martin have you seen China Liberty apartments.
Our problem is driving the kind of thing there also.
Very strong position to win more business.
According to our estimates.
The total project accumulated fellas.
Also a solution there.
City surpassed RMB 10 billion.
Just for reference.
Number that's been that's a tough quarter last quarter it was a ballpark.
Got it.
The growth was driven.
Primarily private pipeline sales going to larger automate this.
This amount has been growing very fast.
Top two to three years and the contribution of both Kurt.
<unk> has been expanding very quickly.
Okay, I'd like to make it clear that these numbers are preliminary estimates, which including the contract side and our mutual access to existing customers.
Customers are estimates also made based on the assumption uplift timing of new models of the pricing up in and it's not just us.
In general our way.
Uh huh.
It's completely crazy.
Pretty much on track to deliver more milestones to negotiate and there's so much there.
Thank you.
Yeah.
Thank you.
The next question comes from Nathalie Roos HEICO International.
Please ask your question.
Hi, good evening, Thanks for taking my questions and congratulations on a very solid quarter.
So my question is regarding Gozitan exactly temporary shovel Uh huh.
Regarding the news of your exactly to have reshuffled.
Okay. So basically let me for your AR, and then food and alcohol business.
So just wondering the eye off the major reasons behind that what kind of the statistic all operational change well it bring to the.
The cloud and T mobile business. Thank you.
Yeah, We do management Shuffle, you know from time to time, our I believe our executives recession, we shuffled program helps.
Helped expand the capability.
Capability of individuals to excel between Baidu.
It demonstrates that we have already established a strong and agile team.
Which is to able to make adjustments in a dynamic market environment.
Many large companies have used to this kind of a program to develop the leaders for the ear authorizations and five our strategy execution.
Particularly our England dynamic world in <unk>.
Fact that baidu develops coaches and a promote talent internally.
Schindel typhoons and Jackson.
Have all risen to senior positions within Baidu.
So join us.
2012, I believe and our demonstrated you.
Capabilities King virus.
I mentioned in golf and Baidu, he made a significant contribution to strengthening our.
Mobile ecosystem.
Baidu AI cloud is alright, he's a revenue growth engine for us.
We are benefiting from the digital and intelligent transformation of China's traditional industry.
And the public service sector.
I Trust that those capabilities are to had flipped in and keep our momentum at full speed, we believe having a dedicated senior executive team to beat.
Ah well allow us to better capture the huge market potential.
And as for a hyphen R. P T O.
He will be able to spend more time on our long term technology vision and drive synergies between AI and I'll hold off on them.
Uh huh.
Jackson join Us in 2019 aim the past few years. He served in various financial management roles in the mobile business and the west highly involved are paying.
Being in a state of the operation.
Do you already feel a deep understanding of our mobile business.
Our mobile ecosystem is the cashcall for Baidu and well.
Well continue.
Generating strong profits.
Jackson is highly capable of helping us execute our strategy.
Given.
Our strong financial management and operational background.
Any sort of is this a straw homegrown team. We believe Baidu is what are you capable to execute to win strategy.
In all areas going forward.
Yeah.
Sure.
Okay.
Yeah.
Thank you. The last question comes from Miranda from Bank of America Securities. Please ask your question.
Thank you for taking my question and congratulation on the results. My question is about <unk>. Two so we saw the news that you do a it's about to launch a new crop Bordeaux soon can management give us more additional color on how is the cargo the friends on other E E V stops and traditional.
Oh, yes cars.
And what's the Cdos Pat lines, where are the sphere, a sexier all given the disruption to the supply chain from the Colgate am I still on track with the previous plan to take orders in second half this year and started mass production next year. Thank you.
Oh yeah.
Alright, and then do.
Do you do plans to introduce its first.
Model for mass production in early next month.
The market that you do target, it's a family passenger vehicles.
The price about RMB 200000, a.
We believe it is a very big and promising market in which you do have a lot of room for growth.
We are all very excited about the features that you do so happy to start and the value of what you do can offer to consumers when it becomes available.
What do you do with the key point is not being electric but being intelligent.
We believe Baidu is the best and intelligent driving technology, which do you do well that reached the upcoming models. So Judas key selling point for upcoming model will be more on the software side as.
That's why I asked that suddenly integration.
Hardware and software.
This model will be equipped with baidu, leading autonomous driving solution like a N. P. E. B P. That's why I asked our advanced infotainment system like door OSV and.
And that's the team have filed many patents.
The debates of mid stage.
But you didn't call well be much more like Oh, the wall, but than any other car on the market.
On the pipeline side, you do plan to introduce it hurts the concept to production car Hum.
To ace and take orders for its first model.
In the second half this year and delivers the vehicles starting in 2020 three.
Hmm.
Despite the Covid stuff.
Right.
Majority of the team based in Shanghai.
I think we are pretty much still on track I think this is in line with our expectations when.
When we started this a.
Business.
We will also they're happy to see that you do have two labs.
Second the model at the end up with year, Dan to start taking orders in 2023 and are.
Delivered the vehicles being 2024.
So we believe due to equip them with our industry, leading intelligent driving capabilities.
Well be well positioned.
The EV market.
Thank you.
[laughter].
Thank you, ladies and gentlemen that does conclude our conference for today. Thank you for participating you may now disconnect.
[music].
Hmm.
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