Q4 2022 Baidu Inc Earnings Call
Speaker 1: Hello and thank you for standing by for Baidu's 4th Quarter and 2022 Earnings Conference Call.
Speaker 1: At this time all participants are in listen only mode.
Speaker 1: After management's prepared remarks, there will be a question and answer session.
Speaker 1: Today's conference is being recorded. If you have any objections, you may disconnect at this time.
Speaker 1: I would now like to turn the meeting over.
Speaker 1: To your host for today's conference, Juan Lin.
Speaker 1: Baidu is Director of Investor Relations.
Speaker 2: Hello everyone and welcome to Baidu's fourth quarter and physical year 2022 earnings conference call. Baidu's earnings release was distributed earlier today and you can find a copy on our website as well as on newswire services. On the call today we have Robin Lee, our co-founder and CEO of Baidu.
Speaker 2: Rong Luo, our CFO , Dao Shen, our EVP in charge of Baidu AI Cloud Group, ACG, and Zhen Yili, our SVP in charge of Baidu Intelligent Driving. After our prepared remarks, we will hold a Q&A session.
Speaker 2: Please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Dedication Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to different maturity from our current expectations.
Speaker 2: For detailed discussions of these risks and uncertainties, these refer to a basic annual report and other documents filed with the ICC and Hong Kong Stock Exchange. I do that not undertake any obligation to update any former looking statement, except as required under applicable law.
Speaker 2: Our earliest press release and lead call include discussions of certain unaudited non-GAAP financial measures. Our press release contains a reconciliation of the unaudited non-GAAP measures to the N-Audited Most Directly Comfortable GAAP measures and is available on our IR website at IR.vaidu.com.
Speaker 2: As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on the BIS IR website. I will now turn the call over to our CEO Robin.
Speaker 3: Hello everyone. In Q4 2000, 2022, by the core revenues were impacted by a challenging involvement caused by a rapid increase in COVID-19 cases and its impact on the broader economy. However, we managed to improve our operating profit.
Speaker 3: and margin year over year in the quarter. Beyond that, Vyseo demonstrated its value as a trusted platform for users seeking accurate and authoritative information during critical moments like the peak time of COVID-19 pandemic.
Speaker 3: As restrictions in China were relaxed and many people get infected, people were most keen to monitor the progress of the epidemic in their local areas.
Speaker 3: We quickly mobilized our resources and launched COVID-19 indices based on Baidu search queries, providing real-time updates and forecasts for better transparency.
Speaker 3: Also, we partnered with reputable hospitals and medical experts to offer guidance and advice for public health.
Speaker 3: In Q4, health-related search queries grow about 40% year-over-year, reaching a record-breaking high.
Speaker 3: queries grow about 40% year-over-year, reaching a record-breaking high.
Speaker 3: Today we are on the threshold of exciting new developments in our industry.
Speaker 3: For this call, I will focus on three major themes and then I'll provide quarterly reviews across our BIN slides. And finally, I'll talk about our outlook for 2023.
Speaker 3: Regarding the major themes,
Speaker 3: First, although our fourth quarter results were impacted by COVID-19, we are optimistic about our path to reaccelerate revenue growth in the coming quarters.
Speaker 3: So far in Q1, we have already seen a recovery of our online marketing revenue from the trial, in particular from verticals in healthcare, travel, business services, and lifestyle.
Speaker 3: Assuming no significant new destruction.
Speaker 3: We expect this recovery trend to continue and boost our online marketing revenue through increased ad demand and take advantage of Penthouse conception in China. We also anticipate resuming cloud project implementation as this operations return to normal.
Speaker 3: signing new contracts, and accelerating AI cloud revenue growth.
Speaker 3: Second, we are riding high on the wave of AI as our earlier investments make us well positioned to benefit.
Speaker 3: Now that the industry is about to experience significant growth and monetization.
Speaker 3: Over the past many years, we have doubled down on AI, recognizing potential to drive market expansion and increase enterprise value. Today, AI has become a cornerstone of many of our products and services.
Speaker 3: For example, in search, the early family of large models have been instrumental in delivering improved search results since March 2019.
Speaker 3: This model is the enable improved ranking and multi-model search capabilities. In Cloud, we leverage our AI expertise to offer industry-specific AI solutions and applications for traditional industries such as transportation, manufacturing.
Speaker 3: energy and utility.
Speaker 3: utilities.
Speaker 3: Our intelligent driving business, built on the backbone of Baidu's computer vision and other machine learning algorithms, is another testament to our commitment to this field. Recently, with users reading about CH ladder 2.9, users facilitated a
Speaker 3: large language models using generated AI have created a magic trend that will revolutionize many businesses.
Speaker 3: Baidu is well positioned to capitalize on the imminent inflection point in AI, thanks to our extensive talent pool, well-developed infrastructure, a diverse array of businesses, and leading technology.
Speaker 3: We are also excited about the upcoming launch of ErnieBot, our new conversational AI bot powered by our latest in-house large language model.
Speaker 3: We plan to fully integrate Ernebot across all of our operations.
Speaker 3: For our consumer-facing products, we plan to embed Erlebot into Baidu Search first. We believe this will reshape information generation and presentation and create a new entry point for the next generation Internet.
Speaker 3: helping us attract more users and gain market share in a profitable manner.
Speaker 3: In the future, we will also integrate Erniebot into Xaudo, which will allow Xaudo to significantly upgrade all the smart devices and services.
Speaker 3: We believe AIGC will also provide notable potential for IGE on content generation and user acquisition.
Speaker 3: for R2B businesses.
Speaker 3: We plan to make this technology widely available to our customers.
Speaker 3: developers and ecosystem partners to help boost productivity across industries.
Speaker 3: to help boost productivity across industries.
Speaker 3: By opening the platform to generate a large language model to the public,
Speaker 3: We expect more and more business owners and entrepreneurs to build their own models and applications on our AI cloud.
Speaker 3: For intelligent driving, we plan to integrate ErneBot into our auto solution, further enhancing user experience. We also believe generative pre-trained transformers will play an important role in driving the expansion of our operations.
Speaker 3: Clearly, we can benefit from the new AI Insection point as we have timely prepared our overall bins for this new MAGA Trent.
Speaker 3: Turning to my third piece, we will continue to focus on the long-term sustainable development of our company. As you all know, 2022 was an incredibly challenging year. However, we have used time wisely to lay a strong foundation for our economy.
Speaker 3: by building a more efficient organization through cost optimization, organizational adjustment, and management reshuffle. As a result, in the second half of 2022, Baidu Core's non-GAAP operating margin and profit
Speaker 3: both improved year over year. We believe a more streamlined operation will help us to achieve sustainable growth.
Speaker 3: We believe a more streamlined operation will help us to achieve sustainable growth.
Speaker 3: Now let's review the first quarter operating highlight.
Speaker 3: quarter operating highlights.
Speaker 3: AI cloud reported 4% year-over-year growth in Q4. Revenue growth decelerated from the prior quarter due to the impact of COVID-19 operates at the end of the quarter. Nevertheless, the margins of AI cloud in Q4 improved year-over-year. Two major factors were at play.
Speaker 3: First, we continue to scale back low margin business for both apps and cloud solution projects.
Speaker 3: And second, we continue to standardize our AI solutions and applications for specific use cases in traditional industries.
Speaker 3: For example, our quality inspection and patrol inspection solutions have been adopted by many leading companies in traditional industries like chemical fiber, electric power, and renewable energy.
Speaker 3: We have seen margin improvement as we replicate our AI solutions and applications which tackle industry specific challenges.
Speaker 3: By working with industry leaders, we are enhancing our knowledge of industry-specific challenges and standardizing AI cloud solutions and applications for scale. As an example, thermal power, which is mainly coal-fired, is a very important part of the industry's
Speaker 3: makes up majority of the power supply in China, generating around 5.9 trillion kWh in 2022, according to the National Bureau of the Physics of China.
Speaker 3: Recently, we developed an AI solution for a leading coal-fired power plant in Shanxi province to improve the efficiency of power generation through methods such as automated cooling systems. According to our internal estimates,
Speaker 3: This solution resulted in almost 5 grams of coal consumption per kWh, well above our customers' expectation of 1 gram reduction.
Speaker 3: This also means 12.5 gram reduction in carbon dioxide emissions per kilowatt hour.
Speaker 3: a 12.5 gram reduction in carbon dioxide emissions per kilowatt hour.
Speaker 3: We aim to create more similar projects to gain skills.
Speaker 3: Turning to Intelligent Driving, we continue to make significant progress in the fourth quarter, further reinforcing our beliefs in our strategy and BIMS model.
Speaker 3: ApolloGo remains the largest autonomous ride-hailing service provider in the world.
Speaker 3: measured by the number of rides completed. In Q4, ApolloGo provided 561,000 rides to the public on open roads. That's up 162% year over year. By the end of January , the cumulative number of rides exceeded...
Speaker 3: our services.
Speaker 3: These accomplishments also build our safety record to bolster both users' and regulators' trust and fuel the development of the fully driverless ride-hailing market.
Speaker 3: In 2022, we made some notable breakthroughs in fully driverless operations on public roads.
Speaker 3: The last August .
Speaker 3: We have begun to offer fully driverless ride-hailing services in Wuhan and Chongqing. In late December , we were granted permission to test drive vehicles with no safety operator in the car on public roads in the Yidong region of Beijing.
Speaker 3: A critical step before the capital city allows fully driverless ride-hanging operation.
Speaker 3: As I stated in the past, labor cost is a major cost component in rotating operations.
Speaker 3: Removing safety operators from vehicles can significantly reduce this cost.
Speaker 3: In Q4, fully driverless rides provided to the public are increasing very fast, helping us to expand our operations and reduce costs per mile. In 2022, we also unveiled RTSix.
Speaker 3: aiming to bring the cost of our taxi to the price range of mass market EVs for the first time in China. This initiative will allow us to further reduce our costs in the future.
Speaker 3: Baidu Apollo's auto solutions made a breakthrough engagement with a multinational automaker. It intends to cooperate with us on EVP functionality for one of their popular car models in China.
Speaker 3: Moving into mobile ecosystem.
Speaker 3: Our traffic remained strong. Both total mobile search queries and feeds distributed through Baidu app continued to experience double-digit year-over-year growth in the quarter. In December , MAUs for the Baidu app increased 4.2% year-over-year.
Speaker 3: Despite revenue declining in Q4, our mobile ecosystem continued to generate high operating profit.
Speaker 3: operating margin, and substantial cash flow, thanks to increased efficiency.
Speaker 3: Encouragingly, we have seen a recovery in our online marketing revenues after the Chinese New Year holiday.
Speaker 3: On another positive note, retail and e-commerce remained an outperforming vertical with more than 20% year-over-year growth, accounting for over 10% of the total advertising revenue.
Speaker 3: Users not only come to buy due to search for information and knowledge, but also increasingly come to ask to search for services and merchandise.
Speaker 3: driving up growth in merchandise search queries and transactions on Baidu.
Speaker 3: Quarterly GMB facilitated by DoSearch grown by 84% year-over-year.
Speaker 3: in Q4. Short videos contributed to year-over-year increase in feed revenue in Q4 despite macro challenges.
Speaker 3: Apart from feed, we believe short videos also benefit search in both user experience and monetization. And the growing prevalence of short videos within Baidu Mobile ecosystem should drive long-term online marketing revenue growth.
Speaker 3: We continue to help content creators to generate content through AI, enriching our mobile ecosystem, in particular producing short videos. As we move forward into 2023, our priorities are clear and focused.
Speaker 3: First, we are committed to revenue growth as we have seen a clear pathway for a successful BINs recovery. Second, we are poised to take advantage of the huge potential of AI to drive BINs growth.
Speaker 3: We aim to integrate generative AI into most of our products and services and make our cutting-edge large language models available to both consumers and businesses.
Speaker 3: Third, we will maintain healthy growth while also strengthening our foundation. Our mobile ecosystem should continue to generate strong margins and cash flow. We aim to continue expanding margins for AI Cloud and outgrowing our internet peers.
Speaker 3: We also will continue to make strategic and prudent investments in intelligent driving to capture the long-term market opportunity. With that, let me turn the call over to Rong to go through financial results.
Speaker 1: Thank you Robin. Now let me welcome through the details of our first quarter and four year 2022 financial results.
Speaker 1: We closed the year 2022 with solid financial results. BaiduCo's pure-fought revenue was RMB 25.7 billion, decreasing 1% year-over-year. In 2022, BaiduCo generated RMB 95.4 billion, all US dollars 13.8 billion in revenue, basically flat from last year. BaiduCo's pure-fought revenue was RMB 95.4 billion, decreasing 1% year-over-year.
Speaker 1: have filled our business now and will continue to do so in mid or long term.
Speaker 1: For the full year 2022, now online marketing business accounting for 27% of Baidu core revenues, up from 22% in 2021. Within the now online marketing business, revenue from Baidu AI Cloud increased by 4% year over year to RMB 5.1 billion Q4.
Speaker 1: on Apple to Apple comparison. And what are by 23% year over year to IMB 17.7 billion in 2022 on Apple to Apple comparison.
Speaker 1: So I'll do it with another revenue contributor to learn about online marketing business.
Speaker 1: Xiao Du continue to achieve solid revenue growth in both Q4 and year 2022.
Speaker 1: By the call, online marketing revenue decreased by 6% year over year and 4% sequentially in 2014 due to the weight demand for advertisers in the challenging macro environment caused by COVID.
Speaker 1: Final call on light marketing revenue was done by 6% year-over-year in the year 2022.
Speaker 1: IT revenue was RMB 7.6 billion in 2014, increasing 3% year-over-year. IT revenue was RMB 29.7 billion in the year 2022, decreasing 5% year-over-year.
Speaker 1: Cost of revenue was RMB 16.9 billion in Q4, decreasing 2% year-over-year, primarily due to the reduction of content costs, cost of goods sold, and other costs related to new AI business.
Speaker 1: partially offside by the increase in traffic acquisition costs.
Speaker 1: The cost of revenue was IMB 63.9 billion in 2022, decreasing 1% over the year, primary due to an increase in traffic acquisition costs, bandwidth costs, cost of goods and other costs related to new AI business.
Speaker 1: offset by the decrease in common causes.
Speaker 1: Operating expenses were RMB 11.5 billion Q4, a decrease of 17% 17 year-over-year, which was primarily due to a reduction in stock release expenses.
Speaker 1: Operating expenses for RMB 43.8 billion in 2022 decreasing by 12% year over year, which has primarily due to a reduction in channel spending, promotional marketing and personnel related expenses. RMB 43.8 billion in 2022 decreasing by 12% year over year, which has primarily due to
Speaker 1: Non-GAI operating income was RMB 6.5 billion Q4 and non-GAI operating margin was 20%.
Speaker 1: Non-gate operating income was RMB23.2 billion in 2022 and non-gate operating margin was 19.19 in 2022.
Speaker 1: For Baidu Core, non-GAIN operating income was RMB 5.5 billion and operating margin was 21% in Q4. Non-GAIN operating income was RMB 20.9 billion and non-GAIN Baidu Core operating margin was 22% in year 2022.
Speaker 1: Regarding the non-offering items, in Q4, total other income, that was RMB 1.8 billion, mainly resulting from a favorable gain of RMB 1.6 billion from long-term investments.
Speaker 1: In-contact expenses was RMB 1.3 billion. In 2022, total other loss net was 5.8 billion, mainly resulting from a fair value loss of RMB 3.9 billion and an impairment loss of RMB 3.9 billion from long-term investments.
Speaker 1: In contact expenses, it's RMB 2.6 billion. In Q4, net income attributable to Baidu was RMB 5 billion and diluted earnings per ADS was RMB 13.59. Net income attributable to Baidu core was RMB 4.8 billion.
Speaker 1: Net margin for Baidu Corp was 19.19. Non-GAAT net income attributable to Baidu was RMB 5.4 billion. Non-GAAT diluting earnings per ADS was RMB 15.25.
Speaker 1: Long-gan net income attributable to Baidu Core was RMB4.9 billion and long-gan net margin for Baidu Core was 19.9. In the year 2022, net income attributable to Baidu was RMB7.6 billion and diluting earnings for ADS was RMB19.85.
Speaker 1: Net income attributable to Baidu Core was RMB 7.6 billion and net margin for Baidu Core was 8%.
Speaker 1: Longuang net income attributable to Baidu was IMB 20.7 billion and Longuang's diluting earnings per ADM amounting for IMB 58.93. Longuang net income attributable to Baidu was IMB 19.9 billion.
Speaker 1: and non-getter net margin for Baidu Core was 21%. Cash and short-term investments for Baidu Core as of December 1st, 2022 were RMB 177.4 billion all US dollar 25.7 billion.
Speaker 1: Free cashflow for buy-to-corp, excluding IT, was RMB18.1 billion, or US$2.6 billion in 2022.
Speaker 1: Baidu Corp had approximately 36,300 employees as of December 31, 2022. On a separate note, we are excited about IT's continuous efforts to improve operating efficiency.
Speaker 1: In the quarter, IT once again generates positive non-get operating profits and frees cash flow.
Speaker 1: On the user side, IT's average daily number of total subscribing members increased to 111.6 million in 2004, a net addition of 10.6 million from the previous quarter. IT maintains its largest market share for the drama category.
Speaker 1: in terms of effective visual views, according to enlightened data. The addiction in the past 12 months has erased around US$1.3 billion post-vis fund raises.
Speaker 1: But I do continue to hold controlling voting power in IT and consoling IT's financial results. So with that, let's now open the call to questions.
Speaker 1: Operator, please.
Speaker 4: Sure.
Speaker 1: Ladies and Gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press the like button.
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Speaker 1: Please press star 2. Participants are requested to restrict one question at each time.
Speaker 1: Your first question comes from Alex Yao
Speaker 1: Alex Yao from JP Morgan. Please ask your question.
Speaker 1: Thank you management for taking my question and congrats on a strong quarter. I have a couple of questions for the online advertising business. Can you share with us the trends you are seeing in February post the Chinese New Year holidays?
Speaker 1: from an industry perspective, what are the stronger recovery industries and what are the relatively weaker recovery industries and particularly I'm interested in the offline related verticals such as a travel local services.
Speaker 1: and health care. Can you comment on your rapid exposure to these offline radio verticals and how are they recovering since the Chinese New Year holiday? And then secondly, can you share with us your preliminary thoughts?
Speaker 1: on the advertising recovery trend in the coming months. Particularly, I think the second quarter will be a little bit special because the consumption has already been normalized and you are coming against a low base on your real basis.
Speaker 1: How should we think about the advertising growth trends in the next couple of months, particularly second quarter? Thank you.
Speaker 3: Hi, Alex. This is Robin. Our ad is highly correlated with COVID. As you know, when we entered the first quarter, the number of COVID infections has passed its peak.
Speaker 3: And it's now a downward trend. People's daily lives are gradually back to normal and the operations of many companies are recovering as well.
Speaker 3: As the economy continues to recover, our ad revenue is gradually improving from the top.
Speaker 3: When we look into our ad verticals, we have seen substantial improvements in our largest verticals including healthcare, travel, lifestyle, and franchises.
Speaker 3: These are all pretty much offline businesses. And online businesses, especially online games, are relatively weaker. And regarding to the recovery by region, I think the COVID infection...
Speaker 3: number has passed its peak in all of China. The regions passing the peak earlier started to recover earlier, and the post-Chinese New Year holiday, Tier II and Tier III cities recovered faster than Tier I cities.
Speaker 3: That's because a lot of people took longer breaks from their families before going back to tier 1 cities for work.
Speaker 3: And again, the magnitude of the recovery correlates heavily with the recovery of our top verticals.
Speaker 3: As we look beyond the first quarter and into the latter part of 2023, we are confident that our absence will benefit from China's reopening and macro recovery.
Speaker 3: And with that, we look forward to demand recovery from advertisers, which should provide significant boost to our ad revenue. I also want to highlight that advertisers-
Speaker 3: prefer to spend on performance-based ads rather than pure brand promotion during the process of economic and business recovery. And search has proven to be the most effective form of performance-based advertising.
Speaker 3: because users have a clear intent when using search.
Speaker 3: Search ads connect the user's intentions with the most relevant product and service offerings. That's why we expect to gain more marketing dollars from our advertisers.
Speaker 3: with the most relevant product and service offerings. That's why we expect to gain more marketing dollars from our advertisers.
Speaker 3: Over the long term, we will continue to benefit from the sustained growth of China's
Speaker 3: Macro economy improvement.
Speaker 3: Also, e-commerce and short videos will continue to drive long-term growth of our ad business.
Speaker 3: Overall, we believe our ad revenue should outgrow China's GDP in the long run.
Speaker 3: Beyond that, we are very excited about the opportunities around generative AI.
Speaker 3: We believe by incorporating Ernie Bauch, Baidu app and particularly Baidu search, we all have an intense user experience.
Speaker 3: The new features powered by Learnibot should help us to attract new users and drive user engagement.
Speaker 3: and also drive advertising interest in Baidu too.
Speaker 3: So this will empower our long-term revenue growth.
Speaker 4: Thank you.
Speaker 4: Operator, the next question please.
Speaker 4: questions here. Thank you.
Speaker 1: Your next question comes from Alicia Yap from Citigroup. Please ask your question.
Speaker 5: Hi, yeah, thank you. Good evening, Robin, Julius and management team. Thanks for taking my questions. My question is related to chat GPT. So there's been a lot of expectation on by do progress in chat GPT and also the AI generated content.
Speaker 5: Can management share with us what could be the new opportunity that you are seeing in this field and how it's by two positions in this trend? Any color that management can share would be appreciated. Thank you.
Speaker 5: could be the new opportunities that you are seeing in this field and how is Baidu positions in this trend. Any color that management can share would be appreciated. Thank you.
Speaker 3: Thank you for your questions Alicia. We are obviously excited about Chinese EPD and AIGC. It represents a magnitude that could change a lot of things.
Speaker 3: We are working on ErnieBot, a new version of Conversational AI Bot that uses our latest technology in large language models.
Speaker 3: We will embed Ernie Baath into BIDO search first and we'll open it to the public in March.
Speaker 3: Baidu is the leader in China's technology innovation.
Speaker 3: Remember we launched Ernie in March 2019 and have scaled it up with well over around a 100 billion parameters.
Speaker 3: It is trained by serving billions of user search requests and other applications every day. So in terms of NLP capabilities, Ernie is considered as the state of the art Chinese language model. And it is not only about language.
Speaker 3: but also about understanding Chinese culture. Erme 3.0 is already a very localized AI foundation model for China market.
Speaker 3: which means the generated large language model we are working on right now will be more suitable in Chinese language and to the China market than models developed overseas.
Speaker 3: Which means the generative large language model we are working on right now will be more suitable in Chinese language and to the China market than models developed overseas.
Speaker 3: In addition, our deep learning framework, PADO PADO, on which Ernie is based, has gained a strong momentum. Millions of developers use PADO for their AI works.
Speaker 3: This is a strong synergy between the framework layer and the model layer.
Speaker 3: AI-pre training, as you know, is very expensive. We believe our full stack AI capabilities will allow us to view the most efficient large language model and support all kinds of applications from search.
Speaker 3: to content generation or any vertical areas that could improve productivity significantly.
Speaker 3: vertical areas that could improve productivity significantly.
Speaker 3: For Baguze Search, I just mentioned that we're working hard on revolutionary version of Baguze Search built upon Ernie Valt.
Speaker 3: that incorporates generated AI into our search algorithm as well as content creation.
Speaker 3: and we are adding interactive features too.
Speaker 3: Users will soon be able to interact directly with the new generative large language model.
Speaker 3: It could be complementary or even upgrading the traditional search experience and attract more users. The chatty PT type of features could potentially become a new traffic entry point for Internet in
Speaker 3: and therefore expand the market size of GERG.
Speaker 3: Meanwhile, it will also help our advertisers, our content creators, and the merchant, etc. With our strong AI capabilities, we should be able to keep iterating and upgrading the model. Certainly, it's just one example.
Speaker 3: There are many other applications we believe will also benefit from it.
Speaker 3: And for AI Cloud, our AI Cloud provides full stack offerings of four layers from the cloud infrastructure layer to deep learning open source framework layer, then to the large foundation model layer and ultimately to application. So these are the four.
Speaker 3: And by opening the generated large language model to the public, aka, you know, model as a service, we should help many business owners and end up doing their own models and applications on our cloud.
Speaker 3: bring about significant positive change and improvement in a number of areas, including increased efficiency, better decision-making, and improved customer experiences.
Speaker 3: So to recap, by doing strong AI capabilities, build our mode in large language model and AI foundation models. In addition to expand the market size for search, we are able to help many, many industries to build their own models, develop their own application.
Speaker 3: and significant improve their productivity. We believe it will be a game changer for cloud computing. AI is transforming many industries in a big way, and we are super excited about what's to come.
Speaker 3: We're building an AI ecosystem around Ernie Bot.
Speaker 3: As of today, a number of organizations have already decided to integrate Ernie Baat into their product and services.
Speaker 3: And remember, this is just the beginning of the journey.
Speaker 3: the beginning of the journey.
Speaker 1: Thank you. Thank you, Robin. Thank you. Your next question comes from Gary U. With Morgan Stanley . Please ask your question.
Speaker 1: Thank you. Thank you, Robin. Your next question comes from Gary U with Morgan Stanley . Please ask your question.
Speaker 1: Thank you, Rubbing. Thank you. Your next question comes from Gary U. With Morgan Stanley . Please ask your question. Hi. Thank you, man.
Speaker 3: and congratulations on the thesis of results. So a couple of questions regarding the AI cloud business. First one is for the revenue growth. With the disruption in revenue collection that we saw in fourth quarter, push out the benefit first quarter. And if you've seen the reopening kicked off in projects of cloud so far.
Speaker 3: What are the overall cloud revenue growth for 2023 that management expects to see?
Speaker 3: and what kind of product offering we can see from the cloud service as the major growth driver for 2023 and how to expect the company growth rate and travel of the cloud market in the coming years to be.
Speaker 3: And I think a second question related to that is can you also comment on overall IT spending budget by enterprises in the public sector? First is the private sector versus the public sector and also do you expect to win these these a number of new cloud projects this year and do you think that the update will be gradual given the
Speaker 6: the first questions and then let Roan to carry the last one.
Speaker 6: So we do have seen the gradual recovery of cloud revenues as our on our D team has begun to work on the ongoing projects post-req opening.
Speaker 6: However, you know the cycle from sales lead to a revenue recognition varies from a few months to a few quarters. The considering that our AI cloud revenue growth should be backlogged this year.
Speaker 6: and cloud solution projects.
Speaker 6: as we focus on margin improvement for the cloud.
Speaker 6: This initiative, we have an impact on our ever new growth and going forward. But still, we aim to continue our growing our Internet peers in the 2023.
Speaker 6: If we look into the long term, the big twine for traditional industries to move business on to cloud.
Speaker 6: and use AI to improve their efficiency, remain and change.
Speaker 6: I believe that the digital and the intelligence transformation will be the key to ever for the GDP growth in the near future and for sure we will benefit.
Speaker 6: the most from this transformation.
Speaker 6: because we think by doing is uniquely positioned. Actually, compared to other cloud provides full stack offerings and whole leaders as Robin just mentioned from cloud infrastructure to developing platform.
Speaker 6: You know, that's PIDO PIDO, because you know, it's your large foundation models and applications. In all the four layers can work seamlessly together in each of our end-to-end solutions, achieve optimal outcomes for our plans.
Speaker 6: even at lower costs versus other solutions, which is built from different providers or that cloud platform and models.
Speaker 6: So we're costs versus other solutions, which is built from different providers of that cloud platform and models.
Speaker 6: In addition, end-to-end solutions can actually upgrade in much shorter time, once we have improvement on any of these layers.
Speaker 6: which will further benefit the plants. So if you were in the sectors of a transportation manufacturing, energy, and utilities, or other industries,
Speaker 6: So I believe by this call service should be the most efficient one.
Speaker 6: Because in addition to the tech not technical and advantage I just explained we already know the industry and we know the pinpoints.
Speaker 6: And we have accumulated the sonic experience.
Speaker 6: by successfully delivering high-quality products already in the industries.
Speaker 6: Most importantly, as Robin just mentioned, we plan to integrate any bot into our cloud and AI products.
Speaker 6: So this should help many business owners and entrepreneurs view their innovative applications, explore new business or improve their operations.
Speaker 6: So we've got to let this be a significant step.
Speaker 6: for our AI cloud and potentially we ship the whole China's cloud industry.
Speaker 6: So we will help more business owners and entrepreneurs to live from digital era to AI era.
Speaker 6: where EA technology will play a vital role in productivities in all industries.
Speaker 1: With that, I will attend to long for your last break. Thanks, though. Yeah, I'm going to adjust your question regarding to our AXLM agents.
Speaker 1: We continue to improve margins for cloud by cutting low margin businesses and continuing building the AI applications which can scale up, which is a consistent strategy for years.
Speaker 1: As we mentioned before, our AI cloud actually includes into past. The first one will be the personal cloud, which continue to generate a Dix-Empath training problem margin, while the enterprise cloud is still lost making, while the margin is improving, both in low-growth margin and operating margin studies.
Speaker 1: Inside, if you look at the new projects with sign, the projectile models continue to be sina, silenetse is bringing its end-to-denies launching.
Speaker 1: Robin has talked a lot about how we can achieve the magic improvement in his preparing marks and this will help us continue improving our magic in future.
Speaker 1: know that it takes time to build a site for air application of volume, which can be used by many companies in the industries. From confident, by those folks that have air stability, it helps us to...
Speaker 1: And lastly, we're pretty much on track to make the AI Cloud approach role in our heritage business in the coming few years.
Speaker 1: much on track to make the AI cloud a profitable and healthy business in the coming two years.
Speaker 4: Thank you.
Speaker 4: Thank you.
Speaker 1: Your next question comes from Eddie Liu with Bank of America. Please ask your question.
Speaker 1: Eddie Liu with Bank of America. Please ask your question.
Speaker 3: Good evening, guys. So have a couple of quick questions around your investment and margins. As we are having an economic recovery, can you talk a bit about your investment plan for 2020 free such as user acquisition and headcount?
Speaker 3: It may be related to that. I think you're probably also mentioning that the AI chat boot could be pre-expansed to operate. Also, you'll be related to that. Could you tell us a little bit about the margin pull-out debt? And then could you give us some color on the margin pull-out of your core marketing business?
Speaker 3: as well as the long-term R&D and GMA expense target. Thank you.
Speaker 1: Thank you so much for your questions and let me try to address your questions.
Speaker 1: If we still remember, I actually start to cut cost expenses.
Speaker 1: since the end of the YouTube 21, which is ahead of the reality of our concept passing in the industry in China, and we carefully reveal and restructure our business.
Speaker 1: Asc?? What is?
Speaker 1: For mobile consistent with size star and even size star, some businesses where Bible has obviously will have no comparison to our advantages or we can now be profitable for long term. By doing so, the more by the immediate mobile consistent growth today is more healthy than one year ago.
Speaker 1: and having a much linear operations than before. And during the past years, the total pet cost by the car actually reduced by 8%. And we are not focusing on the errors, where we are in testing class or where testing class.
Speaker 1: And at the same time for AI Cloud, we set to graduate to be in the middle of the low margin business.
Speaker 1: We are also tightening our control over our cost. You can see that as a result, you can do the two by the cost of printing expenses.
Speaker 1: decreased by 9% over year. If we separate them out, S-GNA was tombed by 15% on five year over year, and IND was tombed by 3% over year.
Speaker 1: In the second half of the year 2022, by due course, and now gets operating profit margin, it is increasing year-over-year.
Speaker 1: And now we have a healthier cost structure, stronger organization than one year ago. So we will move on to the year 2023. We will remain worried this is happening and we will continue to balance the revenue growth and margin as we are building a long-term sustainable development for hope.
Speaker 1: for the whole organization. If we look into each like items.
Speaker 1: We will continue to monitor our eye for all promotional activities.
Speaker 1: particularly the use acquisition cost. And we will carefully manage all the other variable causes.
Speaker 1: For AMD, you have asked just now, we are working hard to prove the efficiency of our team. The AMD team today are required to focus on building the technologies, products, or services which can create more values for users and customers.
Speaker 1: We believe over the Note 10 we should be able to see the operating language from INDESRAM.
Speaker 1: and at day 9, we will continue to invest for growth.
Speaker 1: and new opportunities.
Speaker 1: opportunities and closely monitor the recovery.
Speaker 1: For care packs studied, we will keep investing in cutting-edge technologies like large-level model or generative AI because we believe it will transform many businesses.
Speaker 1: we will keep investing in cutting-edge technologies like large-language models or generative AI because we believe it will transform many businesses and provide huge opportunities for life.
Speaker 1: While we're able to further improve our efficiencies of reallocate some resources to supporting the new initiatives, such as in Unimbo, in short, we will not hesitate to invest in our new program in business.
Speaker 1: So as the summary, we've been looming to each business. Mobile resistance should continue to generate high-profile and cash flow in the built-in, which is our foundation. And for AI Cloud, and to continue to expand our margins, within AI Cloud, and the price of cloud, we'll continue to tap fryler wide- metres and pox on kicking the street.
Speaker 1: As Robin Dore has just said, we're continuing to standardize our air solutions and air vacations.
Speaker 1: Our personal cloud will continue to earn a different profit and not losing the future.
Speaker 1: For a political, we will continue to invest for the future, but meanwhile we will carefully monitor its operational and financial metrics to evaluate our performance and investment
Speaker 1: Over the long run, we believe we still have room to optimize our cost and expenses. But during this process, we will dynamically allocate resources and balance the growth with margins and cash flow. Thank you so much for your presence, Edwin.
Speaker 1: If we still have room to optimize our cost and expenses, but during this process, we will dynamically allocate resources and balance the growth with margins and cash flow. Thank you so much for your presence, Edwin.
Speaker 7: Thank you. Your next question comes from Wei Ji Yong with UBS. Please ask your question. No. No. No. No. No. No.
Speaker 7: Thank you. Your next question comes from Wei Ji Yong with UBS. Please ask your question.
Speaker 5: Hi, good evening management. Congratulations on a strong quarter and thank you for taking my question. I want to ask about your Robotaxi business. I'm wondering what is the current unique economics for this business and how should we think about the breakeven timeline for the Robotaxi?
Speaker 5: And also, if management can share any color on your technology roadmap, that will be appreciated as well. Thank you.
Speaker 7: Thanks for your questions. This is Zhenyu. For questions regarding your native knowledge, as you know, the major cost or road taxi are labor cost and vehicle cost.
Speaker 7: So, first of all, labor cost. As you know, fully gravity is the operation and the no safety operator is the car. Which helps to lower labor cost.
Speaker 7: In 2022, we made a big progress in providing free wireless service on the open road. Now we are providing free wireless wireless service in Wuhan and Chongqing. For example, in Wuhan, we kept expanding operations by covering the wide area and every little dust and dust.
Speaker 7: longer daily operating hours and also by growing or flaking over vehicles.
Speaker 7: In December , we will allow the two test drive-3 driverless cars on the open roads in Beijing, Yijuan. This is in port-tender-stifed towards 3 driverless operations in the capital city.
Speaker 7: In 2023, we plan to further extend the operate and write for fully-fledged operation.
Speaker 7: We will continue to reduce the labor cost by allowing more vehicles to remove intensively or rate her.
Speaker 7: More normal cities in China are supportive to autonomous ride-hated operations.
Speaker 7: As a master leader, I do its IDFating from this chance.
Speaker 7: Also, as we said before, the Gating Up operations have asked to return all calls, technology, and further improve our TIP performance. As we skill up, we will further improve all call technology and gain in touch with our humble record.
Speaker 7: Able goal remains the largest autonomous ride heading to its provider globally. Last year, we provided more than 1.5 million rides to the public.
Speaker 7: Now, average is vehicle in top city like Beijing, provides more than 15 rides a day. This number is already close to what a taxi can do. We video by continuously improving all technology. More and more cities will give green light to...
Speaker 7: offer you travel in the right heading service in the future. Secondly, reducing vehicle cost.
Speaker 7: gravity to ride hitting service in the filter. Secondly, reducing vehicle cost with Apollo RTX 6.
Speaker 7: which is designed to offer large skills for the e12 list ride setting services.
Speaker 7: We are bringing the cost or repayment to the price range or market electricity we cost for the first time. We believe we will continue to decline in the future. As China's EU market is developing world-fossed.
Speaker 7: and the entire supply chain is highly localized. The cost of auto-path still has a lot of room to decrease.
Speaker 7: is highly localized. The cost of auto-path still has a lot of room to decrease.
Speaker 7: Compining those two factors will believe that the unit if only or applicable will continue to improve. As Robin said, once we go out, we can leverage large-language model to improve technology. This will help us to further improve safety performance.
Speaker 7: Thank you. Thank you.
Speaker 1: Your next question comes from Kenneth Fong with Credit Suisse.
Speaker 6: Please ask your question. Hi, thank you for taking my questions and congrats on the very strong set of results. I have a question on the user traffic and user time spent. Have you seen any impact or changes in these two parameters as China reopened, especially in the big cities? Thank you.
Speaker 7: Hi, Ken. This is Robin. People started to spend more time outdoors, post other reopening, but actually user time spent for our major apps as a whole increased 6.6% year-old year of thinking January .
Speaker 7: and that up-performs the overall mobile market. We have a wide variety of apps that cater to various needs of users. By the way, this is one of the very few super apps in China.
Speaker 7: and by the search has a unique value proposition. We help people quickly find the most relevant and authoritative information online through technology.
Speaker 7: So whenever you search for information knowledge, they come to buy do. When they come back to work, this becomes more apparent.
Speaker 7: Even if they want to check for academic development in their regions or check the interest exam scores, this kind of needs can be better and better matched by the BIDU search and other...
Speaker 7: By the app. Over the past years, we continue to use technology to enrich content and services so we can provide our users with better experiences, search, feed, and many other products.
Speaker 7: Today, people might only come to us to search for information, but also to find products and services. This efforts have strengthened by the leading position in China's mobile internet space.
Speaker 7: And another highlight is, of course, early bot as I mentioned before. It has the potential to become a new traffic entry point.
Speaker 7: for people online. Also using AI to generate short video content is a typical application for generated AI. We believe AIGC will help us accumulate more short videos on our platform over time.
Speaker 7: And the direct benefit would be increasing video viewership and ad revenue.
Speaker 7: And a direct benefit would be increasing video viewership and ad revenue.
Thank you. Your next question comes from Lincoln Kong with Goldman Sachs. Please ask your question.
Your next question comes from Lincoln Kong with Goldman Sachs. Please ask your question.
Thank you, management for the opportunity. I have a follow-up on terms of chativity and our IR NEBOT. So it does seem that many domestic company are recently keeping now seeing their hot knowing with us or used by this, you know, the IR NEBOT technology. So can.
You know, imagine elevates have been more on high-dem, the formats of this partnership and what could be the monetization opportunity here and how big our should we think about this revenue potential. And also in terms of competition. So how do we think about the Internet companies coming off with the similar service to the limit?
some already announced their plan to partner with us to integrate learning about capabilities into their products or services or operations. More and more enterprises realize that the generated large language models are going to change their industries.
and they would like to capture this opportunity. The fact that birdie bot has attracted so much interest also shows that by doing it, we all recognized for our leading AI capabilities and the age of AI has finally come.
And regarding to monetization opportunities, early bot will be integrated into BIDU search in case the user experience, and users will be much more dependent on us for all kinds of path and need. Therefore,
significantly expand the market size of search. We are using AIGC to expand our content like text, images, or videos, and this will create a great opportunity before I have to attract new users.
in which user time spend and user's diggining. Tell about game share in the online ad market over the long run. And for cloud customers, they will be able to leverage our full stack AI capabilities, not just the basic stuff, storage or bandwidth, where your thought day to day, is kind of thing.
They can devise their apps based on our AI framework, head of pedal and the foundation model earning. It will be much easier, much more efficient, much more powerful. So this will propel our cloud revenue to.
In our full stack of AI capabilities, it's quite unique. It contains cloud infrastructure, deep learning platform like PadoPado, and a large language model, and a widely used application. We have a...
Strong presence in all four layers and these four layers work together efficiently our large language model early early 3.0 has been trained with millions of daily user search requests and other popular by the family of apps
By the early part, we'll be using this kind of field hugely well-cacked data for to help improve and adapt quickly over time. The barrier to entry for this is very high. It requires multiple years of significant investment.
and we have the first Muger advantage. The technology behind Bernie Bob is called Reinforcement Learning, the Human Feedback.
So here, the human feedback part is critical. As the first mover, we get more and more human feedback and further improve our capabilities we have had of anyone else. And right now we are focused on preparing the launch of Erniebot and make continuous improvement after the launch. And we are also focusing on areas that we believe Erniebot will create.
So stay at home. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.
So stay at home. Thank you. Thank you. Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.
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Hello and thank you for standing by for BIDU's fourth quarter and 2022 earnings conference call. At this time, all participants are in listen only mode. After management prepare 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, and attendees. Is Wan Lin.
by Doos Director of Investor Relations. Hello everyone and welcome to By Doos 4th quarter and basically here, 2022 earnings conference call. By Doos' earnings release was distributed earlier today and you can find a copy on our website as well as our R&D Checkout for the results of all your business strategies. Yeah, suppressing the result. Uh... Uh... Uh...
On the call today, we have Robin Lee, our co-founder and senior, Rong Luo, our CSO, GoaShen, our UDP in charge of SIDU AI Cloud Group, ACG, and JNU, our SDP in charge of SIDU intelligence driving. After our prepared remarks, we will hold a Q&A session.
Feeds note that the discussion today will continue forward-looking statement made under the state's harbor position of the US private security litigation reform act of 1995. All of these statements are subject to risk and uncertainty that may cause actual results to deformity from our current expectations. For detailed discussions of risk and uncertainty, these refer to our status annual report and other documents.
filed with the ICC and Hong Kong Stock Exchange. By do that, not undertake any obligation to update any forward-looking statement, except as required under applicable law. Our early press release and these calls include discussions of certain unnoticed non-get financial measures. Our press release contains a reconservation of the unnoticed non-get measures.
to the unout?tiqued most directly comfortable GAAP measures and is available on our IAR website at ir.bidoo.com. As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on by this IAR website.
I will now turn the call over to our CEO Robin. Hello everyone. In Q4 2000, 2022, by the core revenues were impacted by a challenging involvement, caused by a rapid increase in COVID-19 cases and its impact on the broader economy.
However, we managed to improve our operating profit and margin year over year in the quarter. Beyond that, Biden demonstrated its value as a trusted platform for users seeking accurate and authoritative information during critical moments like the peak time of COVID-19 pandemic.
As restrictions in China were relaxed and when people get infected, people were most keen to monitor the progress of the epidemic in their local areas.
We quickly mobilized our resources and launched COVID-19 indices based on by-do search queries, providing real-time updates and forecasts for better transparency.
Also, we partnered with reputable hospitals and medical experts to offer guidance and advice for public health. Thank you for, tells related search queries grow about 40% year over year reaching a record he started breaking Christ. Sure.
Today we are on the threshold of exciting new developments in our industry.
For this call, I will focus on sweet major themes and then I'll provide orderly reviews across our bin slides. And finally, I'll talk about our outlook for 2023.
Regarding the major things, first although our first quarter results were impacted by COVID-19, we are optimistic about our path to reaccelerate rental growth in the coming quarters. Go far into one.
We have already seen a recovery of our online marketing revenue from the trial.
In particular, from burcos in healthcare, travel, then service it in lifestyle.
Assuming no significant new destruction, we expect this recovery trend to continue and boost our online marketing revenue through increased ad demand and take advantage of Penthouse Conception in China. We also anticipate resuming cloud project implementation.
As this operation is returned to normal, signing new contracts and accelerating AI cloud revenue growth.
Second, we are writing high on the ways of AI, as our earlier investments make us well positioned to benefit. Now that the industry is about to experience significant growth and monetization. Over the past many years, we have doubled down on AI, recognizing potential to drive market expansion and increased enterprise value.
Today, AI has become a cornerstone of many of our products and services.
For example, in search, the early family of large models have been instrumental in delivering improved search results in March of 2019. These models enable improved ranking and multi-model search capabilities. In cloud, we leverage our AI expertise.
to offer industries specific AI solutions and applications for traditional industries such as transportation, manufacturing, energy, and utilities. Our intelligent driving business viewed on the backbone of FIDUS computer vision and other machine learning algorithms.
is another testament to our commitment to the students. Recently, the users reading about ChatGPT, large language models using generated AI, have created a magnetoint that will revolutionize many benefits. By doing so, we have a position to capitalize on the imminent effects of the virus.
by our latest in-house, large language models.
We plan to fully integrate Erniebot across all of our operations. For our consumer-facing products, we plan to embed Erniebot into vital search first. We believe this will reshape information generation and presentation and create a new entry point.
for the next generation in the net. Helping us attract more users and gain market share in a profit bulk manner.
helping us attract more users and gain market share in a profit-bolt manner.
In the future, we will also integrate Ernie Baab into Xiao Dou, which will allow Xiao Dou to significantly upgrade all the smart devices and services.
We believe AITC will also provide multiple potential for ITE on contents generation and user acquisition.
for, our, to be
We plan to make this technology widely available to our customers, developers, and ecosystem partners to help boost productivity across industries. I open the platform to generate a large language model to the public. We expect more and more business owners.
and the end of the north to build their own models and applications on our AI Cloud.
For intelligent driving, we plan to integrate Ernie bot into our auto solution, further enhancing user experience. We also believe Generative Pre-Train Transformers will play an important role in driving the expansion of our operations.
We plan to integrate Ernie Bot into our auto solutions further enhancing user experience. We also believe Generative Pre-Train Transformers will play an important role in driving the expansion of our operations.
Clearly, we can benefit from the new AI Insection point as we have timely prepared our overall bins for this new MAGA Trent.
Turning to my third plea, we will continue to focus on the long-term, sustainable development of our company. As you all know, 2022 was an incredibly challenging year. However, we have used the time wisely to lay a strong foundation for...
by building a more efficient organization through cost optimization, organizational adjustment, and management with Shuffle.
As a result, in the second half of 2022, by the course non-GAF operating margin and profit, both improved year-over-year.
We believe a more streamlined operation will help us to achieve sustainable growth. Now, let's review the first quarter operating highlights. AI Cloud recorded 4% year-over-year growth in Q4. Revenue growth desalered it from the prior quarter due to the impact of COVID-19 on the end of the quarter.
Nevertheless, the margins of AI cloud include improved year-over-year. Two major factors were at play. First, we continue to scale back low margin business for both S and cloud solution projects.
And second, we continue to standardize our ad solution and applications for specific use cases in traditional industries. For example, our quality inspection and the petroleum inspection solutions have been adopted by many leading companies in traditional industries like us.
chemical fiber, electric power, and renewable energy. We are seeing margin improvement as we replicate our AI solutions and the application which tackle industries to the CSA challenges.
By working with the industry leader, we are enhancing our knowledge of industry's specific challenges and the standardizing AI cloud solutions and applications for scale.
As an example, thermal power, which is mainly coal fired, makes up the majority of the power supply in China, generating around 5.9 trillion kilowatt-hour in 2022, according to National Bureau of Physics of China.
Recently, we developed an AI solution for a leading coal-fired power plant in Shenzhi Province to improve the efficiency of power generation through methods such as automated cooling systems. According to our internal estimates,
This solution resulted in almost a 5g of cold consumption per kilowatt hour. Well about our customer expectation of 1g reduction. This also means a 12.5g reduction in carbon dioxide emissions per kilowatt hour.
We aim to create more similar projects to gain skills. Turning to intelligence writing, we continue to make significant progress in the fourth quarter, further reinforcing our beliefs in our strategy and bin model. We aim to create more similar projects to gain skills.
Apollo GO remained the largest autonomous driving autonomous ride-paving service provider in the world, measured by the number of rides completed. In Q4, Apollo GO provided 561,000 rides to the public on open roads. That's up 162% year over year.
By the end of January , the cumulative number of rides exceeded 2 million. This demonstrates users' increasing acceptance of a volatile, autonomous and ride-hailing service.
As we scale up our operations, we are able to continue to stay in proof our technologies and refine our services.
This accomplished man also built our safety record and has to bolster both users and regulators trust and including the development of the fully driverless, right-gaining market.
The company's plans also build our safety record and to bolster both users and regulators trust and filling the development of the fully driverless, right-haining market.
In 2022, we made some Notebook RxRoot in fully-traveled operations on Pathic Goals.
We made some notebook breakthroughs in fully-traveled operation on perfect roads. Since last August ,
We have begun to offer food and drive railing services in Wuhan and Chongqing. In late December , we were granted permission to test drive vehicles with no safety operator in the car on the top of the road in the Yidrong region of Beijing. A critical step before the capital city allows
fully driverless ride heading operation. As I stated in the past, labor cost is a major cost component in ride heading operations. Removing safety operators from vehicles can significantly reduce this cost. In Q4, fully driverless rides provided to the public are increasing very fast.
helping us to expand our operations and reduce cost per mile. In 2022, we also unveiled our assets aiming to bring the cost of all the taxis to the price of mass market EVs for the first time in China.
This initiative will allow us to further review our cost in the future.
I do a follow-up auto solutions made a breakthrough engagement with a multinational automaker. It intends to cooperate with us on AVP functionality for one of their popular car models in China. Moving into mobile ecosystem.
Our traffic remains strong. Both total mobile search queries and feeds distributed through BIDU app continue to experience double digits year over year growth in the quarter.
In December , MAUs for the Baidu app increased 4.2% year-over-year. Despite revenue declining in Q4, our mobile ecosystem continued to generate high operating profit, operating margin and substantial cash flow, thanks to increased efficiency.
In Originly, we have seen a recovery in our online marketing revenues after the Chinese New Year holiday. Another positive note, retail and e-commerce remained an outperforming virtual with more than 20% year-over-year growth, accounting for over 10% of the total advertising revenue.
Users not only come to buy due to search for information and knowledge, but also increasingly come to us to search for services and merchandise.
driving up growth in merchandise, search queries, and transaction on Baidu. Portally GMB facilitated by Baidu Search grown by 84% year-over-year in Q4.
Short videos contributed to year-over-year increase in seed revenue in QOR, despite macro challenges.
Apart from seed, we believe short videos also benefit search in both user experience and monetization. And the growing prevalence of short videos within bi-dumable ecosystem to drive long-term online marketing revenue growth. We continue to help count in the creators.
to generate content through AI, enriching our mobile ecosystem, in particular producing short videos.
As we move forward into 2020-SQUAY, our priorities are clear and focused.
First, we are committed to revenue growth as we have seen a clear pathway for a successful advanced recovery.
Second, we are poised to take advantage of the huge potential of AI to drive bin's growth. We aim to integrate generated AI into most of our products and services and make our cutting edge large language models available to both consumers and business.
Third, we will maintain healthy growth while also strengthening our foundation. Our mobile ecosystems would continue to generate strong margins and cash flow. We aim to continue expanding margins for AI Cloud and outgrowing our Internet peers.
We also will continue to make strategic and prudent investments in intelligent driving to capture the long-term market opportunity. With that, let me turn the call over to Long to go through financial results.
Thank you Robin. Now let me will show the details of our first quarter and four year 2022 financial results.
With close the year 2022 was solid financial results. Baidu cost total for revenue was RMB 25.7 billion, decreasing 1% over year. In 2022, Baidu cost generating RMB 95.4 billion, all your $13.8 billion in revenue basically flat from last year.
Now, online marketing business continue to grow VARIFAS, a range 30% of bidocal revenue was quarter, up from 26% a year ago. Demonstrating how cloud and other AI power businesses have filled our business now, and will continue to do so in mid or long term.
For the full year 2022, now online marketing business, according to 27% of by-the-called revenues are from 22% in 2021. Weakness is not online marketing business. Revenue from 5Ai Cloud increased by 4% over year to Mb5.1 billion Q4.
on Apple to Apple comparison. And what are by 23% year over year to IMB 17.7 billion in 2022 on Apple to Apple comparison. So I'll do with another revenue contributed to the online marketing business.
Xiao Du continue to achieve solid revenue growth in both Q4 and year 2022.
By the cost, online marketing revenue decreased by 6% over year and 4% sequentially in Q4, due to the weight demand from advertisers in the challenging macro environment caused by COVID.
FIDO-CALL online marketing revenue was done by 6% year-over-year in the year 2022. IT revenue was 97.6 billion to 4, increasing 3% year-over-year. IT revenue was in the 2020-22 decreasing 5% year-over-year.
Cost of revenue was IMD-16.9 billion in Q4, decreasing 2% year-over-year, primary due to the reduction in content costs, cost of goods sold, and other costs related to new AI business.
partially offside by increased traffic acquisition costs. Cost of revenue was IMV 63.9 billion in 2022, decreasing 1% over year, primary due to an increase in traffic acquisition costs, bandwidth costs, cost of goods sold, and other costs related to new AI bidnets.
offset value decrease in common causes. Operating expenses for RMB 11.5 billion Q4, a decrease of 17% 17% year-old year, which was primarily due to reduction in star-related expenses. Operating expenses for RMB 43.8 billion
and now get a pretty margin was 20%.
Long-day operating incomes are in the 23.2 billion in 2022, and long-day operating margin was 19%-1922.
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and operating margin was 21% Q4. Noggin operating income was IMP20.9 billion and Noggin by and Noggin by do call, operating margin was 22% in the year 2022.
Regarding the non-opening items, in Q4, total other income net was 91.8 billion, mainly resulting from a very low gain of 91.6 billion from long-term investments. In-contact expenses was 91.3 billion. In 2022, total other loss net was 5.8 billion, mainly resulting from a very low loss of income net was 5.8 billion.
and an impairment loss of RMB3 billion from long-term investments. In-contact expenditures used RMB2.6 billion. In Q4, net income attributable to Baidu was RMB5 billion, and diluted earnings per ADS was RMB13.59. Net income attributable to Baidu core was RMB4.8 billion.
and net margin for Baidu core was 19% 1.9. NONGA Net income attributable to Baidu was IMV 5.4 billion. NONGA's diluty earnings per ADS was IMV 15.25. NONGA Net income attributable to Baidu core was IMV 4.9 billion.
Income attributable to Baidu core was IMP 7.6 billion and that margin for Baidu core was 8%. Nongge and NetIncome attributable to Baidu was IMP 20.7 billion and Nongge diluting earnings by the end, amounting for IMP 58.3.
Nonga-Nan income attributed to Baidu Court was RMB19.9 billion, and Nonga-Nan margin for Baidu Court was 21%. Cash and shortening investments for Baidu Court as of December 1st, 2022 were RMB177.4 billion, or your salary 25.7 billion. Free cash flow for Baidu Court excluding IT.
was RMB 18.1 billion, or US$2.6 billion in 2022. I do call approximately 36,300 employees as December 31, 2022. For more separate notes, we're excited about IT's continuous efforts.
to improve operating efficiency. In the quarter, I.C. once again, generate positive non-gay operating profit and break cash flow. On the user side, I.C.'s average steady number of total subscribing members increased to 111.6 million Q4.
and net addition of 10.6 million from the previous quarter. IT manhand is largest market share for the drama category in 10,000 effective visual fields according to E-Lyzen data. The addiction in the past 12 months.
IT raised around $1.3 billion, post this fund raises. By the continue to hold controlling voting power in IT and consolidating IT financial results. I'm afraid of a step. Let's not open the call to questions.
$1.3 billion post-vis thought raises by to continue to hold controlling voting power in IT and consolidating IT financial results. Our fridge is there. Let's not open the call to questions.
Which you can learn, please. Offer there, please. Sure. Ladies and gentlemen.
We will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request,
now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.
Participants are requested to restrict one question at each time. Your first question comes from Alex Yao from JP Morgan. Please ask your question.
Thank you, Management, for taking a question and congrats on a strong quarter. I have a couple of questions for the online advertising business. Can you share with us the trends you are seeing in February post the Chinese New Year holidays from an industry perspective? What are the stronger recovery?
industry and what are the relatively weaker recovery industry and particularly I'm interested in the offline radio verticals such as a travel local services, franchising and healthcare. Can you comment on your revenue exposure to these offline radio verticals and how are they recovering since?
the Chinese New Year holiday. And then secondly, can you share with us your preliminary thoughts on the advertising recovery trend in the coming months? Particularly, I think the second quarter will be a little bit special because the consumption has already been
normalized and you are coming against low base on your real basis. How should we think about the Editing Gross Trend in the next couple of months, particularly second quarter. Thank you.
Hi, Alex, this is Robin. Our absence is highly correlated with the code. As you know, one way entered the first quarter, the number of COVID infections has passed in the peak. The number of COVID infections has passed.
And it's now a downward trend. People's daily lives are gradually back to normal and the operations of many companies are recovering as well. As the economy continues to recover, our ad revenue is gradually improving from the trial.
When we look into our ad verticals, we have substantial improvements in our largest verticals including healthcare, travel, lifestyle, and franchise business.
These are all pretty much offline benefits. And online benefits, especially online games, relative to the weaker.
And regarding to the recovery by region, I think as the COVID infection number has passed its peak in all of China, the region's passing the peak earlier started to recover earlier.
and the post of Chinese New Year holiday, Tier 2 and Tier 3 cities recovered faster than Tier 1 cities. That's because a lot of people took longer breaks from their families before going back to Tier 1 cities for work.
And again, the magnitude of the recovery correlates heavily with the recovery of our top verticals. As we look beyond the first quarter and into the latter part of 2020 screen,
We're confident that our absence will benefit from China's re-opening and macro-recombring.
And with that, we look forward to the demand we cover from advertisers, which should provide.
significant boost to our ad revenue. I also want to highlight that advertisers prefer to spend performance-based ads rather than pure blend promotion during the process of economic and business recovery. And search has pooled in.
to be the most effective form of performance-based advertising. Because users have a clear intent when using search.
Search ads connect the users' intentions with the most relevant product and service offer. That's why we expect to gain more marketing dollars from our advertisers. Over the long term, we will continue to benefit from the sustained growth of China's
connected users' intentions with the most relevant product and service offer. That's why we expect to gain more marketing dollars from our advertisers. Over the long term, we will continue to benefit from the sustained growth of China's macro economy improvement.
Also e-commerce and short videos will continue to drive long-term growth of our ad business. Overall, we believe our ad revenue should help grow China's GDP, acting along long. Beyond that, we are very excited.
The new features powered by Ernie Bach should help us to attract new users and drive user engagement.
and also drive advertised for interesting by due to. So this will power our long-term revenue growth.
Thank you. Thank you. So the next question please.
Thank you. Your next question comes from Alicia Yap.
from City Group. Please ask your question. Hi, yeah, thank you. Good evening, Robin, Julius, and management team. Thanks for taking my questions. My question is related to CHEDGPT. So there's been a lot of expectation by due progress in CHEDGPT and also the AI CHEDGPT.
Thank you for your questions, Alicia. We are obviously excited about chat and EPD and AIGC. It represents a magnitude that could change a lot of things. We are working on early bot, a new version of conversational AI bot that uses our latest technology in large language models.
We will invent early baths into BIDO search first and we'll open it to the public in March. BIDO is the leader in China's technology innovation.
We have been working on large language models for a few years.
Remember, we launched Ernie in March 2019 and have scaled it up with well over 100 billion parameters.
It is trained by serving billions of user search requests and other applications every day. So in terms of NLP capabilities, Ernie is considered as the state of the art Chinese language
And it is not only about language, but also about understanding Chinese culture. Fermi 3.0 is already a very localized AI foundation model for China market, which means the generated large language model we are working on right now will be more suitable for all.
in Chinese language and to the China market, then models developed overseas. In addition, our deep learning framework, PADO PADO, on which learning is based, has gained a strong momentum. Millions of developers use PADO for their AI works. This is a strong synergy.
between the framework layer and the model layer. AI-pre training, as you know, is very expensive. We believe our full stack AI capabilities will allow us to view the most efficient, large language model and support all kinds of applications.
from search to content generation or an in vertical area that could improve productivity significantly.
For Baguze Search, I just mentioned that we're working hard on revolutionary version of Baguze Search built upon Ernie Bauch that incorporates generated AI into our search algorithm.
as well as content creation. And we are adding interactive features too. Users will soon be able to interact directly with the new generative large language model. It could be, it would be complementary or even...
upgrading the traditional search experience and attract more users. Can TPT type of features could potentially become a new traffic entry point for Internet users and therefore expand the market size of search.
Meanwhile, it will also help our advertisers, our content creators, and the merchant, etc. With our strong AI capabilities, we should be able to keep it rating and upgrading the model. Certainly, it's just one example. There are many other applications.
with these will also benefit from it. And for AI Cloud, our AI Cloud provides full stack offerings of four layers from the Cloud infrastructure layer to deep learning open source framework layer.
and to the large foundation model later and ultimately to application. So these are the four layers. And by opening the generated large language model to the public, aka, you know, model as a service, we should help many business owners and and the end of the work.
We would be our own models and applications on our cloud. Bring about a significant positive change and improvement in a number of areas, including increased efficiency, better decision-making, and...
improved customer experiences. So, too, we kept by doing strong AI capabilities, built our mode in large language model and AI foundation models. In addition to expand the market size for search.
We are able to help many, many industries to build their own models, develop their own application, and significantly improve their productivity.
We believe it will be a game changer for cloud computing. AI is transforming many industries in a big way, and we are super excited about what's to come. We're building an AI ecosystem around Erniebot.
As of today, a number of organizations have already decided to integrate Ernie Baad into their product and services.
And remember, this is just the beginning of the journey. Thank you. Thank you, Rubin.
Thank you. Your next question comes from GaryU.
With Morgan Stanley , please ask your question.
With Morgan Stanley , please ask your question. Hi, thank you, Manage Brenda.
and congratulations on the design set of results. So a couple of questions regarding the AI cloud business. First one is for the revenue growth. Will the disruption in revenue collection that we saw in fourth quarter push out the benefit first quarter?
And if you've seen the reopening kicked off in the projects of Cloud so far, what are the overall Cloud Revenue Group for 2023, the Management Expeccency? What could product offering, what kind of product offering we can see from the Cloud Service?
as the major growth driver for 2023 and how to expect the company growth rate and travel of the cloud market in the coming years to be.
I think a second question related to that is can you also comment on overall IT spending budget by enterprises in the public sector? So the private sector versus the public sector and also do you expect to win these a number of new cloud projects this year? And do you think the uptake will be gradual given the overall macro remains weak?
And just lastly, and a comment on breakeven time, like: what is the keepy Bo on that? So far, we should brea even. Thank you, Gary. Thanks for questions. This though: I will answer the first questions and then wrong tosecure the last one.
So we do have seen the gradual recovery of cloud revenues as our on our D team has begun to work on the ongoing projects post-requ… opening.
However, you know, the cycle from sales lead to a revenue recognition varies from a few months to a few quarters. Now, considering that, our AI cloud revenue growth should be backlogged this year.
So, in meanwhile, we will keep freezing out low margin businesses for both AS and Cloud solution projects.
as we focus on margin improvement for the cloud. This initiative, we have an impact on our revenue growth and going forward. But still, we aim to continue our growing our internet peers in the 2023.
If we look into the long term, the big 24 traditional industries to move business and to cloud.
and use AI to improve their efficiency, remain and change. I believe that digital and the insurgent transformation
We will be the key driver for the GDP growth in the near future, and for sure we will benefit.
the most from this transformation because we think by doing is uniquely positioned. Actually compared to our in the two others in our EI Cloud provides full stack offerings and four layers as Robin just mentioned from
you know, cloud infrastructure to just learning for a platform, you know, that's PADO-PADO, you know, to large foundation models and applications.
In all the four layers can work similarly together in each offer and in solutions. You should achieve optimal outcomes for our plans.
even at lower costs, versus other solutions, which is built from different providers or that cloud platform and models.
In addition, you know, end-to-end solutions can actually upgrade in much shorter time, you know, once we have improvement on any of these layers, in which we'll further benefit the plans.
So if you were in the sectors of a transportation manufacturing, energy, and utilities, or other industries, I believe by this call service should be the most efficient one.
Because in addition to the technic- not-technical and advantage I just explained, we already know the industry and we know the pin points.
and we have accumulated in the solar experience by successfully delivering high-quality products already in the industries. Most importantly, as Robin just mentioned, we plan to integrate any bot into our cloud and AI products. So this should help many business owners.
and entrepreneurs view their innovative applications, explore new business or improve their operations. So with this, we'll be a significant step.
for our AI cloud and potentially we ship the whole China's cloud industry So we will help more business owners and entrepreneurs to live from digital era to AI era where AI technology will play a vital role in productivity in our industry
I do with that I will attend to you for your last part. Thanks, though. Yeah, I'm going to adjust your question regarding to our AI cloud margins.
We continue to improve margins for cloud by cutting low margin businesses and continuing to building the AI applications which can scale up, which is a consistent strategy for years. As we mentioned before, our AI cloud actually includes into past.
The first one will be the personal cloud, which continue to generate a big step on trading project matching, while the enterprise cloud is still lost making, while the matching is improving both in low-growth matching and operating matching strategies.
Instead, if you look at the new projects with SIN, the projectly margins continue to be improving in the past projects. Robin has talked a lot about how we can achieve the margin improvement in his previous remarks, and this will help us continue improving our margins in future. Know that it takes time to be a sizable AI application.
in the coming few years.
Thank you.
Thank you. Your next question comes from Eddie Lune with Bank of America.
Thank you. Your next question comes from Eddie Lune with Bank of America. Please ask your question.
Good evening, guys. So have a couple of quick questions around your investment and margins. As we are having an economic recovery, can you talk a bit about your investment plan for 2020 fruit such as user acquisition and hack count? It did be related to that. I think you're welcome to also mention that the AI.
our expense target. Thank you.
Thank you so much for your questions and let me try to address your questions.
If we still remember, actually we start to cut cost expenses since the end of the year 2021, which is ahead of the algorithm of conceptizing the industry in China, and we carefully reveal and restructure our business. Good courtiers. For more Z pulsition with a size down and even space out covering up for environmental activities subscribe and subscribe for more Z pulsition with a size down and even space out covering up for environmental activities
some businesses where Baidu has obviously will have no comparison to our advantages or we can now be profitable for long-term. By doing so, the mobile system group today is more healthy than one year ago and having a much linear operations than before. And during the past years, the total headpower of Baidu car actually deals by 8%.
and we are not focusing on the errors where we are investing class or where I'm present. And at the same time, for AI Cloud, we start to gradually eliminate the low margin differences.
We also tighten other controls on variable costs. You're perfectly clear that as a result, you can do the two by the cost of printing expenses decreased by 9% year-round. If we separate them out, SGNA was done by 15% on 5 year-round.
and IND was summed by 3% over year. In the second half of the year 2022, by due cause and now gets operating profit and margin, it's increasing year over year. And now we have a healthier cost structure, stronger organization than one year ago. So before the year 2020 is ready.
We will remain worried if it is happening and we will continue to balance the revenue growth and margin as we are building a long-term sustainable development for the whole organization. If we are going to each like items.
We will continue to monitor our eye for all promotional activities, particularly the use acquisition costs. And we will carefully manage all the other valuable causes. For AMD, you have asked just now, we are working hard to prove the efficiency of our team.
The IND team today are required to focus on building the technologies, per-dance or services, which can create more values for users and customers. We believe over the Note 10, we should be able to see their operating language from IND's line. At the same time, we will continue to invest for girls.
and new opportunities, and closely monitor the repairs. For Cape Access Study, we will keep investing in cutting-edge technologies like large-language models or generative AI because we believe it will transform many businesses.
opportunities and closely monitor the reports. For KPEX study, we will keep investing in cutting-edge technologies like large-language models or generative AI because we believe it will transform many businesses and provide huge opportunities for Biden.
While we are able to further improve our efficiencies of reallocate stun resources to supporting the new initiatives.
in any box, in short, whether or not has a green glass in other new promising business. So as a summary, we've all flew into each business. Mobile assistance should continue to generate high-profile and cash flow in the future, which is our foundation.
and for AI Cloud, and to continue to expand our margins, within AI Cloud, and the price Cloud will continue to cut down a little margin to make this at folks on the industry. As Robin Dough has just say, we'll continue to standardize our AI solutions and applications. For personal Cloud, we will continue to earn a decent profit and margin of signature.
For up-ro go, we will continue to invest for the future, but meanwhile we will carefully monitor its operational and financial metrics to evaluate our performance and investment returns. Over the long run, we believe we still have room to optimize our cost and expenses.
a enduring big process with a dynamically allocate resources and balance the growth with margins and cash flow.
During this process, we will dynamically allocate resources and balance the growth with margins and cash flow. Thank you so much for your presence, Adrian.
Thank you. Your next question comes from Wei Ji Yong.
Thank you. Your next question comes from Wei Ji Yong with UBS.
Please ask your question. Hi, good evening management. Congratulations on a strong quarter and thank you for taking my question. I want to ask about your robot taxi business. I'm wondering what is the current unique economics for this business and how should we think about the breakeven timeline for the robot taxi?
And also, if management can share any color on your technology roadmap, that will be appreciated as well. Thanks for your questions. This is the journey. For questions regarding your native knowledge, as you know, the major cost or road taxi are labor cost.
and the vehicle cost. So firstly, labor cost. As you know, fully grounded operation into no safety officer is the car.
vehicle cost. So firstly, labor cost. As you know, 3Growl is an operation in the no safety officer in the car. Which helps to lower labor cost.
In 2022, we made a big progress in providing free wireless service around the open road. No, we are providing free wireless ride-hiding service in Wuhan and Chongqing.
For example, in Wuhan, we kept the existing operations by covering a wide area and longer daily operations operating odds and also by growing off late or with vehicles.
In December , people allowed to test the driving, fully driverless cars on the open roads in Beijing, Yijuan. This is an important step towards fully driverless operation in the capital city.
In 2023, we plan to further expand the offer rate and write for fully-fledged operation.
We will continue to reduce the labor cost by allowing more vehicles to remove intensively or pay the tax.
Model state is in China, or supportive to autonomous ride heading operation. As a master leader, Baidu is fighting from this change.
Also, as we said before, the Gating Up operations help us to refine all fault, technology, and further improve our safety performance.
As we see up, we will further improve all technology and gain in class from regulators.
The public will remain the largest autonomous ride heading service provider globally. Last year, we provided more than 1.5 million rides to the public. Now, an average each vehicle in top city like Beijing provides more than 15 rides a day.
This number is already close to what a taxi can do. We video by continuously improving our technology. More and more stages will give green light to offering travelers the right heading service in the future. I thank the day. Rou???.
We go cost with Apollo 86, which is designed to offer large skills for the e-drivelace and Apollo E- apartheid.
The operating cost or the cost of the price range or market electricity we cost for the first time. We believe that the cost will continue to decline in the future. China's EU market is the world's worst.
and the entire supply chain is highly localized. The cost of auto-path still has a lot of room to decrease. The planning those two factors will believe that the unit economy or a protocol will continue to improve.
As Robin said, once we scale up, we can leverage large language model to improve technology. This will help us to further improve safety performance.
Thank you. Thank you. Your next question comes from Kenneth Fong with Credit Suisse.
Please ask your question. Thank you for taking my questions and congrats on the very strong set of results. I have a question on the user traffic and user time spent. Have you seen any impact or changes in these two parameters as China reopened, especially in the big cities?
Thank you. Hi, Ken. This is Robin. People started to spend more time outdoors, posted a reopening, but actually user time spent for our major apps as a whole increased a 6.6% year-over-year thinking generate.
and that up-performs the overall mobile market. We have a wide variety of apps that cater to various needs of users. By the last one, on the very few super apps in China,
and by the search has a unique value proposition. We help people quickly find the most relevant and authoritative information online through technology.
So whenever you search for information knowledge, they come to buy do. When they come back to work, this becomes more apparent.
Even if they want to check for academic development in their regions or check interest exam scores, this kind of needs can be better and better met by the by-do search and other by-do apps.
Over the past years, we continue to use technology to enrich content and services, so we can provide our users with better experiences in search, in feed, and in many other products. Today, people not only come to us to search for information, but also.
to find products and services. This efforts have strength and by this leading position in China's mobile internet space. And on another highlight of course, early bot as I mentioned before, it has the potential to become a new traffic entry point.
on active services. This efforts have strength and by leading position in China's mobile internet space. And on another highlight of course, early-bought as I mentioned before, it has the potential to become a new traffic entry point for people online.
Also, using AI to generate short video content is a typical application for generated AI. We believe AIGC will help us accumulate more short videos on our platform over time.
The direct benefit would be increasing video viewership and ad revenue.
A direct benefit would be increasing video viewership and ad revenue. Thank you.
Thank you. Your next question comes from Lincoln Kong with Goldman Sachs. Please ask your question. Please ask more questions.
Thank you, management for the opportunity. I have a follow-up on terms of a chat to be T and our Erniebot. So it does seem to, you know, many domestic company are recently to keep announcing their partner with us. We'll use by this, you know, the Erniebot technology. So can.
You'll imagine 11 have been more on the formats of this partnership and what could be the monetization opportunity here and how we think about this revenue potential.
and also in terms of competition. So how do we think about the internet companies coming offering the similar service or two challenges and limits our on-today session opportunity here? Thank you. Sure. We're glad to see that after we announce the plan to.
More and more enterprises realize that the generated large language models are going to change their industries.
More and more enterprises realize that the generated large language models are going to change their industries. And they would like to capture this opportunity.
The fact birdie bot has attracted so much interest also shows that by doing it is well recognized for leading AI capabilities and the age of AI has finally come. And regarding to manipulation of opportunities.
early bot will be integrated into by the search, in case the user experience, and users will be much more dependent on us for all kinds of tasks and need, therefore significantly expand the the market size of search. We are using AIGC to expand our content.
like text images or videos. And this will create a great opportunity for us to attract new users, increase user time spend and user's diggining.
Tell about game share in the online ad market over the long run. And for cloud customers, they will be able to leverage our full stack AI capabilities, not just the basic stuff, storage or bandwidth or database, this kind of thing.
They can devise their apps based on our AI framework, pedal pedal, and foundation model learning. It will be much easier, much more efficient, much more powerful. So this will propel our cloud revenue to you. And our full stack of AI capabilities is quite unique.
It contains cloud infrastructure, deep learning platform like PadoPado, and large language models, and widely used application.
We have a strong presence in all four layers and these four layers work together efficiently. Our large language model, Ernie 3.0 has been trained with billions of daily user search requests and other popular.