Q4 2024 Baidu Inc Earnings Call
Thank you for watching!
Speaker Change: Hello and thank you for standing by for Baidu's fourth quarter and fiscal year 2024 earnings conference call.
Speaker Change: I tried to do mobile ecosystem group E G. The ocean, our EVP in charge of Baidu AI cloud ECG and Jackson, Ginger, who are interim Seattle. After our prepared remarks, we will hold a Q&A session. Please note that the discussion today will contain forward looking statements made under the safe Harbor provisions.
Speaker Change: Of the U S crowded litigation Reform Act of 1995 forward looking statements are subject to risks and uncertainties that may cause actual results Super majority from our current expectations.
Speaker Change: Detailed discussions of these risks and uncertainties. Please refer to our latest annual report and other documents filed with SEC on Hong Kong stock Exchange Baidu does not undertake any obligation to update any forward looking statements, except as required under applicable law.
Speaker Change: Our earnings press release, and this call include discussions of certain unaudited non-GAAP financial measures. Our press release contains a reconciliation of the unaudited non-GAAP.
Speaker Change: To the unaudited most directly comparable GAAP measures.
Speaker Change: It's available.
Speaker Change: <unk> site at IR Baidu Dot Com as a reminder, this congress.
Speaker Change: And in Asia.
Speaker Change: The cost of this conference call will be available on Baidu IR website, I will now turn the call over to our CEO Robin.
Robin: Hello, everyone Baidu core total revenue for the fourth quarter saw a slight year over year increase reaching RMB 27 7 billion.
Robin: Our AI cloud spins demonstrated robust momentum.
Robin: New growth accelerating to 26% year over year offsetting the softness in our online marketing bins.
Robin: The growth was primarily driven by broad market recognition of our capabilities in which we will continue to invest to make sure. We stay at the forefront of this technology macro trend.
Robin: 'twenty 'twenty four marked a pivotal year as Jenny I demonstrated strong market demand.
Robin: We see this momentum reflected in the genuine value we created for our customers school, our AI products and solutions.
Robin: Well as AI cloud services.
Robin: This growth shows how enterprises have a weekend to a ice transform maybe potential catalyzing broader adoption across diverse snia Ross well affirming the markets Trust in Baidu technical capabilities and.
Robin: Expertise.
Robin: As we continue to cement our leadership position as an innovator.
Robin: Innovator arm vision is gradually coming to fruition on multiple fronts.
Robin: Our strategic investments are showing meaningful progress across our key businesses.
Robin: Our cowpens demonstrated strengthening momentum towards the end.
Robin: And off the year with both robust revenue growth and margin expansion.
Robin: As we continue to rebuild the entire product portfolio of our mobile ecosystem with AI, most notably in Baidu search.
Robin: Meanwhile, Baidu autonomous ride hailing surveys Apollo GUL has proven the viability of expense model.
Robin: I mean, our confidence in pursuing global expansion and exploring asset light business models.
Robin: But anyhow demonstrated industry, leading capabilities in instruction following and state of the art rack technology that minimize this.
Robin: Nathan.
Speaker Change: This best in class capabilities happen, Cleveland widespread adoption across various scenarios, leading to significantly growing API calls.
Speaker Change: In December Ernie handled approximately 1.65 billion API calls daily.
Speaker Change: We witnessed a particularly strong external demand with external API costs growing 178% quarter over quarter.
Speaker Change: We saw rapid growth across whereas been sectors, such as education E Commerce entertainment and recall them.
Speaker Change: The robust growth in external API calls, it's driven by two reasons.
Speaker Change: And businesses are finding enough fatty or from E D waves and learning into the our daily operation.
Speaker Change: Second price matters.
Speaker Change: As the interest cost goes down adoption goes up quite quickly.
Speaker Change: We recently made a significant strategic decision to open source, our upcoming Ernie full 0.5 series.
Speaker Change: And make Ernie.
Speaker Change: And Ernie Bot free for end users.
Speaker Change: Which we believe well further expand market awareness of these capabilities and enable broader adoption across an increasing array of industries.
Speaker Change: Reflecting this growing market recognition, our AI cloud business delivered a robust performance in Q4, we have partnered with leading enterprises across diverse sectors, helping them address specific operational challenges using our AI products and solutions.
Speaker Change: We collaborated with state grid Corporation of China to develop a tailored AI solution based on journey and our mass platform chimp.
Speaker Change: We have developed a comprehensive AI solutions that permit key operational processes.
Speaker Change: From power dispatching and equipment condition diagnosed emphasis to procurement safety supervision marketing and office systems.
Speaker Change: Our solutions have demonstrated remarkable effectiveness in boosting operational reliability.
Speaker Change: Impressed by this resolves state grade has increased its spending our AI cloud services further deepening its collaboration with us.
We also collaborated with stop him a leading recruitment company to adopt cool yeah. So.
Ernie powered outbound calling product for campus recruitment.
Speaker Change: Featuring highly human like Weiss with natural conversational abilities. The product enables sophisticated multi around interactions or advanced capabilities in short accurate gouging all candidates interest in job opportunities.
Speaker Change: <unk> consistently keeping conversations on track.
Speaker Change: Was this product chalking achieved a 50% higher acceptance wage for job fair imitations and 17% lower labor costs.
Speaker Change: The growing market recognition and adoption reinforce our confidence and we are optimistic that the growth momentum we witnessed to date, it's just a start.
As enterprises continue to discover novel ways to harness our knee and our AI cloud potential we foresee an ever expanding horizon of possibilities unfolding before us.
Speaker Change: On the consumer facing products Baidu. One court is a shining example in Q4, when costar subscription revenue grow 21% year over here.
Speaker Change: December but of course, mostly active user off AI enabled features reached 94 million almost doubling quarter over quarter, making one cool one of the worlds largest AI products by the number of paying users.
Speaker Change: This quarter, we integrated Baidu, one pool and with Baidu drive enhancing one court asked an AI powered creativity platform.
Speaker Change: This integration allows <unk> to combine personal cloud storage with AI powered a search and the document creation capabilities well, enabling users to streamline our workflow from searching.
Speaker Change: Accessing files to creating and sharing all within a unified seamless platform.
Speaker Change: Furthermore, one introduced a free canvas in January which transforms content creation by enabling users to organize diverse format.
Speaker Change: Text slides I'll do videos and even website links as unified campus.
Speaker Change: Free time that also integrates with Glenn close existing AI capabilities, including AI editor and AI powered Powerpoint features allowing users to access our full suite of AI I didn't tool.
Speaker Change: And save all share their work in any desire format via Baidu cloud.
Speaker Change: Yeah.
Speaker Change: Leveraging or any one voice transforming into a next generation intelligent creativity platform that redefines, how users create collaborate and brain the idea to life.
Speaker Change: Now turning to search our largest consumer facing product, which stands at another compelling Testament to our AI transformation.
Speaker Change: Over the past several quarters, we have aggressively leveraged or need to transform search this has been a challenging but deeply meaningful journey.
Speaker Change: Pioneers crossing all familiar waters, we embraced the uncertainties that come with charting new territory.
Speaker Change: After extensive exploration we have defined our path forward in leveraging the power of language models to prevent the multimedia content in search results.
Speaker Change: Currently 22% of all sorts resolved pages contain AI generated content during the quarter, we mainly focus on redefining and enhancing the quality of our AI generated the search results.
Speaker Change: Yeah.
Speaker Change: So are these advanced capabilities in content generation, we can deliver unlimited to high quality content on demand vastly expanding the depth and breadth of our search results.
Speaker Change: This quarter, we expanded beyond text generation to generate diverse content formats, including short videos notes agents digital humans and live streaming.
Speaker Change: Through this more dynamic and varied content combinations users can now discover a broader range of information that was previously inc. Accessible presented even more engaging ways, that's aligned with evolving use their preferences.
Speaker Change: As a result, we have achieved substantial improvements across sleep I mentioned is off our search results.
Speaker Change: In quality.
Speaker Change: Quantity and format diversity.
Speaker Change: Yeah.
Speaker Change: Alongside this we further enhanced the search experience by optimizing the matching between inquiries and search results.
Speaker Change: By analyzing the nature and the 10 top each query the gin AI enabled search can determine optimal content format and presentation style.
Speaker Change: Test and deliver an AI generated short videos for how to Claris T.
Speaker Change: Generating comparative charts for.
Speaker Change: Analysis focused of searches and dynamically organizing content sequences.
Speaker Change: This intelligent matching ensures that users receive not just the most relevant results, but in the most effective and easy to understand format.
Speaker Change: The effectiveness of this transformation as reflected in our improved user metrics.
Speaker Change: On Baidu App users exposed to AI generated search results demonstrated higher engagement levels.
Speaker Change: Conducted more clarity and showed higher orientation weight and longer time span we are in.
Speaker Change: Courage to see daily search queries per user increased by 2% year over year in December.
Speaker Change: During our AI transformation of search we place a strong emphasis on agent absolutely invasion agents won't become one of the most important form of AI in a deep applications.
Speaker Change: Our agents have now transcended their initial chatbot origins through convergence with digital human technology evolving into embodied intelligent entities with vivid visual presence.
Speaker Change: Thanks to our industry, leading digital human technology.
Speaker Change: This represents a powerful innovation path, we've pioneered breaking new ground in how agents interact with users.
Speaker Change: Yeah.
Speaker Change: Taking our newly introduced Loy our agents as an example.
Speaker Change: This embodied lawyer agents can transform legal expertise and industry knowledge into engaging multimodal content.
Speaker Change: Featuring lawyers actual appearance in live streaming and AI generated short videos.
Speaker Change: Through this agent, we can efficiently generate high quality authoritative content at scale for Baidu search and feed while pioneering innovative format of content and user engagement.
Speaker Change: Moreover, this agents also create significant value for lawyers by helping them viewed personal brands Inc.
Speaker Change: And hence engagement.
Speaker Change: Initial clients and improve lead conversion.
Speaker Change: Such agents are becoming a compelling new addition to baidu is content ecosystem, creating new possibilities, while further diversifying our content landscape.
Speaker Change: In the future of intelligent driving our continued investment in AI are also propelling significant progress in our robo taxi business.
Speaker Change: In Q4, our polo golf delivered remarkable results that reinforce our position as the worlds top autonomous ride hailing service provider.
Speaker Change: Our domestic operations continue to show robust momentum.
Speaker Change: And we have successfully validated our pioneering bins model school year stop operations.
Speaker Change: And established a path to profitability in the autonomous driving industry.
Speaker Change: Importantly, our unrelenting focus on safety remains at the core of our efforts as we expand our services.
Speaker Change: To date.
Speaker Change: Polo golf feeds have accumulated more than 130 million autonomous kilometers.
Speaker Change: Outstanding safety record.
Speaker Change: Scoring our industry leading standards.
Speaker Change: These operational and safety track record has paved the way for further scaling and operational enhancement.
Speaker Change: Building on this achievement, we are confident in expanding beyond mainland China as we enter the next phase of growth.
Speaker Change: In November 2020 for Apollo go secured permits to conduct the testing Oh pingo <unk> in Hong Kong, making.
Speaker Change: Making us the only company to receive robo taxi.
Speaker Change: Authorized lesion in that region.
Speaker Change: Notably Hong Kong represents our first entry into a wife and glide lefthand traffic market.
Showcasing our ability to adopt our autonomous driving technology to different traffic systems, while maintaining rigorous safety standards.
Speaker Change: This achievement recognizes our deep expertise in autonomous driving operations, and we are committed to expanding our footprint and bringing safe reliable and convenient autonomous ride hailing services to more cities and regions worldwide.
Speaker Change: Now, let me review with the key highlights for each business for the fourth quarter.
Speaker Change: Yeah cloud revenue reached RMB, seven 1 billion in Q4, delivering a strong year over year increase of 26% with expanding non-GAAP operating margins.
Speaker Change: This quarter, we doubled the scale of our unified GPU plus are you still achieved a 99% of valleys cleaning time.
Speaker Change: Remarkable achievement enabled by our faster and faster network architecture.
Our network has proven the capability to enable the G. P. U a cross linked gel graphical locations to work together seamlessly with minimize the performance loss and the automatically it resolved.
Speaker Change: The frequent network issues inherent in large scale computing, it's almost oh perceivable impact to our clients demonstrating our ability to deliver peak performance.
Speaker Change: Massive scale.
We continue to enhance chance on our mass platform, which improves model and app developers and the experience for our customers and partners.
Speaker Change: Our platform features the Ernie family off model and offers access to a selection of high quality models across the globe with deep seek being one of our latest additions.
Speaker Change: We offer post training as F T data labeling and preparation for all models hosted on Tampa, and enabling us to deliver the most suitable models and tools to enterprise clients at all scales.
Speaker Change: The increasing market recognition of our AI expertise continues to drive strong momentum in our enterprise client pipeline.
Speaker Change: We have established deep partnerships with leading enterprises, including Xiaomi and G. Kum further highlighting the growing trust in Baidu AI cloud.
Speaker Change: Besides we are increasingly becoming the preferred choice for mid tier businesses.
Speaker Change: This reflects the strengthening competitiveness off our AI infrastructure amongst a healthy evolution and Denver certification our customer portfolio.
Speaker Change: For our mobile ecosystem, our current priority is to further enhance the user experience and refine our product features we will explore monetization opportunities. After our gen. AI enabled search product features and framework become sufficiently refined.
Speaker Change: Additionally, we continue to see agents emerging as a promising avenue for monetization, which represents meaningful growth potential for our advertising business.
Speaker Change: In December over 27000 advertisers are being generating AD spending school Ernie agents on a daily basis.
Speaker Change: This rapid growth in health care legal education, and B to B sectors.
Speaker Change: This rapid adoption stems from agents unique ability to address their specific pain points.
Speaker Change: Agents can quickly master complex now standardized service portfolios.
Speaker Change: A task that traditionally requires lengthy tweeting for human customer service people well efficiency quantifying leads from standard customer inquiries through intelligent multi round interactions.
Speaker Change: For intelligent driving in queue for Apollo gold provided approximately 1.1 million rights to the public nationwide, representing a year over year growth of 36% in.
In January the <unk>.
Speaker Change: Cumulated rights provided that to the public exceeded 90 million.
Speaker Change: Also we reached another milestone recently with the successful transition to 100% fully covered.
Speaker Change: <unk> nationwide.
Speaker Change: Building on this strong momentum and with all of them be bearing commitment to safety as our top priority, we expect to see even faster growth in our volumes, but a significant acceleration anticipated in 2020 five as we further scale our operation.
Speaker Change: We continue to improve the technology as we scale up combined with our validated model and initial steps in expanding global footprint. We believe we are well positioned to create substantial value and reshape the future Oh My bad.
Speaker Change: Driven by our deep rooted belief in technology and conviction.
Speaker Change: <unk> long term value creation potential we will continue to invest to make sure. We stand at the forefront of cutting edge AI technology and deploy that to all our products across the board.
Jackson: Does that let me turn the call over to Jackson to go through.
Jackson: Thanks Robyn.
Jackson: Now, let me walk through the details of our fourth quarter and full year plenty plenty full financial results.
Jackson: Total revenues in the fourth quarter.
Jackson: So the fall upon the 1 billion decreasing 2% year over year total revenues for the full year tender and any fool can be 100. So these three points 1 billion decreasing 1% year over year.
Jackson: Baidu caused Q4 revenues.
Jackson: Seven 7 billion, increasing 1% year over year.
Jackson: <unk>, 20th Honey for Baidu core generated RMB $104 7 billion in revenue, increasing 1% year over year.
Jackson: Baidu course online marketing revenue decreased 7% year over year to RMB $17 9 billion in Q4 accounting for 65% of Baidu caused total revenues.
Jackson: Baidu core online marketing revenue decreased by 3% year over year <unk> 'twenty 'twenty four.
Jackson: Baidu course, not online marketing revenue was RMB nine 8 billion up 18% year over year.
Jackson: The four year 294, not online marketing business increased 12% year over year.
Jackson: Increase not all of my remarks team business was mainly driven by our cloud business.
Jackson: Revenue from IC was RMB six 6 billion in Q4, decreasing 14% year over year revenue from Iot. It wasn't on the $29 2 billion <unk> 2024, decreasing 8% year over year.
Jackson: Cost of revenues was RMB 18 billion in Q4 increased 3% year over year.
Jackson: Primarily due to an increase in traffic acquisition costs cost related to cob business and a one time write down of inventories, partially offset by a decrease in personnel related expenses and the cost.
Jackson: Cost of revenues was RMB 66 point wouldn't be there and he told me hungry for increasing 2% year over year, primarily due to an increase in traffic acquisition costs bandwidth costs and the server custody fees, partially offset by a decrease in personnel related expenses and accounting costs.
Operating expenses were RMB 12, 2 billion in Q4, which remains flat compared to the same period last year, primarily due to an increase in expected credit losses server depreciation expenses and the service company fees, which is sports N. A S research and development input and the channel spending and promo.
Jackson: No marketing expenses.
Jackson: Partially offset by a decrease in personnel related expenses.
Jackson: Be 561 billion or an increase even expected credit losses pertaining to a one time true up.
Jackson: Operating expenses were RMB, five 8 billion in 2024, decreasing 4% year over year.
Jackson: I'm really due to a decrease in personnel related expenses.
Jackson: Operating income was RMB six 9 billion in Q4 compared to RMB five four P. M. What it seems over the last year Baidu.
Jackson: Baidu core operating income was RMB, three 6 billion and Baidu club margin was 13% in Q4 companies who aren't.
Jackson: 1 billion and this time, it's for the same period the Nazis.
Jackson: The decrease was due to a one time loss of 101.
Jackson: William including accrued or heavy losses write down of inventories and up.
Jackson: Operating income was RMB 21 point sweeping yeah. He turned 24 Baidu core operating income was RMB 19, 5 billion and the Baidu core Pas module with 19% in 2024.
Jackson: non-GAAP operating income was RMB 5 billion in Q.
Jackson: Fans got Baidu core operating income was RMB, four 6 billion and uncapped baidu cooperating marketing with 17% in Q4.
Jackson: non-GAAP operating income was RMB 26.2 billion 800 before non fat Baidu core operating income was RMB 23, 9 billion and non cat Baidu core operating margin was 23% in 'twenty three 'twenty four.
In Q4 total other income net was RMB, two 7 billion compared to those who have lost Neto RMB. Two 5 billion for the same periods of last year. Many due to an increase in that core rate change gain arising from exchange rate fluctuation, but you know on Monday in.
Jackson: In the U S dollar.
A decrease you can pick up of losses from equity method investment, which multiplied at certain times always prefer shifts and the resulting loss pick up in 2020 three.
Jackson: Income tax expense was RMB, one 6 billion.
Jackson: 824 total other income net was RMB seven 4 billion yeah Christina.
Jackson: G and 20% year over year, primarily due to a decrease in pick up of losses and income tax expense was RMB four 4 billion.
Jackson: In Q4 net income attributable to Baidu was RMB, five 2 billion and diluted earnings part of it yes. It was RMB 14.26 net income attributable to Baidu core was off five point stupid and my module for Baidu core was a 19% non-GAAP net income attributable to Baidu was RMB six points.
Jackson: 7 billion non stop at that.
Jackson: Yes, it was RMB 19.19.
Jackson: non-GAAP net income attributable to Baidu core was RMB.
Jackson: 7 billion and non-GAAP net margin for Baidu core was 24%.
Jackson: <unk> hundred 94, net incomes to buy a suit.
Jackson: 20th sleep, one 8 billion and diluted earnings part of it yes. It was RMB 65.91, net income attributable to Baidu core was RMB 20 sleep when sodium and that module for Baidu core was 22% net non-GAAP net income attributable to Baidu was RMB 27 billion non stop at that hotel.
Jackson: But yes. It was RMB 676.85, non-GAAP net income attributable to Baidu core was RMB $26 3 billion and I'm certain that the module for Baidu core was 25.
Jackson: As of December.
Jackson: Suddenly for cash cash equivalents restricted cash and short term investments.
Jackson: RMB 139.1.
And cash cash equivalents restricted cash and short term investments excluding IC will be 100, so default put 7 billion free cash flow was RMB 13, 1 billion and free cash flow. Excluding IC was RMB 11, 1 billion E turnaround before.
Jackson: We define that touch position as cash in the past you kudos has totaled a surpassed your policies and other loss total loans convertible senior notes and notes payable.
Jackson: As of December 31st 274, not touch position, that's what I do was RMB Hum Jade and the 75 billion.
Jackson: Baidu core had a person with today's 31000 employees as of December 31st or any other source.
Jackson: With that operator, let's now open the call to questions.
Jackson: Ladies and gentlemen, we will now begin the question and answer session.
Jackson: If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press star two.
Speaker Change: Your first question comes from Alicia Yap with Citigroup. Please go ahead.
Speaker Change: Hey, Thank you good evening management, Thanks for taking my questions My.
Speaker Change: My question is on the latest hot topic. So we have seen a deep sea are gaining a lot of attention lately and Baidu. A reason announcement fallout that open sourcing the upcoming I'm useful 0.5 series and also making oney bought for free so could management share with us.
Speaker Change: The strategic thinking behind a dish most and also how do we view the current competitive landscape are off the foundations models, how best Baidu plan to stay ahead of evolving market. Thank you.
Speaker Change: Okay.
Speaker Change: Hi, Alicia let me and several questions.
Speaker Change: But generally I am foundation modal market is still nascent but you now moving at a very fast pace.
Speaker Change: The deep sea success story, well certainly accelerates the adoption rate of foundation models.
Speaker Change: As foundation models become more accessible and affordable.
Speaker Change: Believe we are entering a truly transformative phase well see an explosion of new AI applications and use cases that will open up incredible opportunities and push the boundaries of what's possible with AI.
Speaker Change: One thing we learned from deep seek is that open sourcing the best models can greatly help adoption.
Speaker Change: When the model is the open source people naturally want to try it out of curiosity.
Speaker Change: Which helps drive broader adoption.
Speaker Change: 34.5, well be our best month ever and we would like to have our users and customers try them out more easily than before.
So our decision to open source or any full 0.5 series.
Speaker Change: Also backed by our deep confidence in our <unk>.
[laughter] technology leadership.
Speaker Change: This conviction stems from our decades long commitment to R&D investment.
Speaker Change: Arm continuous technological innovation.
And.
Speaker Change: Our unique position as one of the few companies worldwide with a full stack AI capabilities.
Speaker Change: Ernie has already demonstrated.
Speaker Change: Demonstrated a strong market traction with daily API calls are searching from 50 million to $1 six 5 billion in just one year.
Speaker Change: So through open sourcing, we believe more developers and users well recognized ernie to value.
Speaker Change: Driving even broader adoption and expanding its impact.
Speaker Change: Across more scenarios.
Speaker Change: Yeah.
Speaker Change: Similarly, making Ernie bought free well enable more users to compare our foundation models with other models on an apple to Apple basis, because they don't charge.
Speaker Change: Last time, we had a major upgrade up Ernie was in October 2020 suite. So it's a long time ago.
Speaker Change: So stay tuned for already for fine in the next couple of months.
Speaker Change: Yeah.
Speaker Change: Having said that I want to emphasize one crucial point.
Speaker Change: So I'm Gonna open sourced all close source foundation models become truly valuable aren't the only ones who can effectively.
Speaker Change: Real world problems at scale.
Speaker Change: We have been committed to an application driven approach.
Speaker Change: You can continuously iterating Ernie was this mindset things launching we have been using ernie to randomly to hard.
Speaker Change: Tronox well serving enterprise customers.
Speaker Change: Internally, we've leveraged or need to successfully transform our consumer facing products like Baidu search and Baidu one cool.
Speaker Change: Extra only.
Speaker Change: Through our mass platform Tim fan.
Speaker Change: We are enhancing the model and application devote them to experience for enterprise clients.
Speaker Change: Ernest industry, leading capabilities in instruction following and a state of the art retrieval augmented attenuation technology.
Speaker Change: Minimize this hallucination.
Speaker Change: Have enabled a wider.
[noise] wide adoption across whereas scenarios.
Speaker Change: And Kim fans comprehensive tool chain allows our customers to customize any model for their own application scenarios.
Speaker Change: Going forward, we plan to accelerate earnings iteration.
Speaker Change: Hum.
Speaker Change: That's the.
Speaker Change: Improvement and cost cutting.
Speaker Change: No potential.
Speaker Change: We will continue evolving it in areas with the greatest potential for a real world impact.
Speaker Change: We are excited about the new chapter of AI give out the mint and.
Speaker Change: We look forward to seeing AI technology bring more groundbreaking application.
Speaker Change: That has lasting value.
Speaker Change: Part of our society.
Speaker Change: Thank you.
Speaker Change: Thank you. Your next question comes from Lincoln, calling from Goldman Sachs. Please go ahead.
Lincoln: Thank you management for taking my question. So my question is about the search business.
Lincoln: So following recent quarters off of search revamp. So how should we think about the future adjustments or changes. So what's the current mix of the G&A I result, and what sort of a target mix.
Lincoln: And also as AI integration continued deepened could you share more color around the user metrics given that yeah, I tried pass such a deep sea and Doble house offerings search capability. So how do you view the competitiveness or the competition dynamics between Baidu search and those type.
Lincoln: Thank you.
Lincoln:
Lincoln: Let me ask the questions on a currency neutral herself all search result pages.
Lincoln: We have confirmed that they are generated contents.
Lincoln: There is much more a pilot.
Lincoln: Pilot them.
Lincoln: We have fundamentally transforming such I'm, making them more powerful and efficient than ever before and staying as Robin said in the prepared remarks was earning warehouse expanding as such on Pax links to offer diverse content formats, including short videos and live streaming agents knows in shale plays.
Lincoln: Different formats can be dynamically combined to create a personalized such experiences as we're continuing to transfer all search. We also are developing the capabilities, which allow for the purpose of my visions adoptions for each new hobbies and prefers.
Lincoln: Offers have slept you look backs or you also results in January.
Lincoln: Among monster that's for users who come out of such on Baidu App.
Lincoln: The sudden engaged with that generates a content, what's even more encouraging.
Lincoln: It's in December.
Lincoln: Such a quality producer on the Baidu app grew by 2% year over year.
Lincoln: We focus on continuous improvement.
Speaker Change: Experiences the spending of the Astral liquidity impossible.
Lincoln: User engagement.
Lincoln: Further on this let me share a smoke case or early ages.
Lincoln: Core values for all of our titles.
Lincoln: During these past Chinese new year holiday.
Lincoln: Many small and medium enterprises are closed for one week.
Lincoln: Customer demand in such a industry actually pick our own agents effectively bridge must get for example, a hearing aid companies saw increased inquiries as a family REO in 19 and chat all I'll do the parents.
Lincoln: How does it meet our.
Lincoln: Other customers.
Lincoln:
Lincoln: Oh, its customer service team actually walked away because that holiday.
Lincoln: Sure I mean Asia is we have the company effectively identify and qualify it the highly relevant sales leads enabling them to efficiently flaw and serve their customers to seamlessly even with our reduced into over the holiday.
Lincoln: Regarding your costs were about all our AI chatbot and such what Lisa we I steel in the world.
Lincoln: At this stage of the evolution are driven by the financial models.
Lincoln: I Gotta make chat box like deep sea, all our AI driven protocols or those kind of efforts.
Lincoln: This old represent different ways to explore potential.
Lincoln: As the leader in kind of such market with hundreds of millions of euros that we maintain our agility.
Lincoln: Holistic marquee view by increasing the best innovations and incorporating the truly innovative AI features I would continue to pioneer the amtrust formations are enhancing the search experiences for our massive user base.
Lincoln: Also as such Spice matrix.
Lincoln: Routine language packs on spending which aligns crooked today was the lost leverage model capabilities.
Lincoln: This positions us we're too late.
Lincoln: Our empower such coordination, we believe such as evolving into an integrated platform that scope young travelers.
Lincoln: One that not only provides us with my answers, but also guy cirrhosis through there in Howard County have from fighting answer is to provide an in depth analysis to completing tasks and ultimately delivering a comprehensive sepsis solution.
Lincoln: Well, Hey, I travel all represent important early space, Yeah application development. The killer App today has not yet you much.
Lincoln: So the key is to maintain Raphael determined pace awful lot of air transformation focus you all are discovering what Joseph shown in me and Wang Corona next generation all such thank you Wellington.
Lincoln: Yeah.
Alex Yao: Thank you. Your next question comes from Alex Yao from Jpmorgan. Please go ahead.
Lincoln: Okay.
Alex Yao: Thank you for taking my question.
Alex Yao: So could you just comment on coal <unk> gross on the.
Alex Yao: First quarter 2005, and full year 2025.
Alex Yao: What are the macro assumptions you made underlying defect.
Alex Yao: At all no.
Alex Yao: The advertising business is truly bottom out in 'twenty, four and started to recover.
Alex Yao: And lastly, what are the potential opportunities for monetizing.
Alex Yao: Search and what is the expected timing. Thank you.
Alex Yao: Since Alex.
Speaker Change: This is Judah slow macro question, yes, we are seeing are the.
Different types of the seamless policies are voting all in the past few months.
Speaker Change: Like the monetary are you seeing a physical and a trailing.
Speaker Change: Trading policies and Huawei police that V smashes will eventually benefit our economy and they need some time to flow through.
Speaker Change: Given that our advertising business is highly correlated with the small media enterprises, who.
Speaker Change: Who are particularly sensitive to macro conditions.
Speaker Change: Class a persistently challenging competitive landscape.
Speaker Change: We haven't really seen any proof of medicine, so far yet.
Speaker Change: While near term cautious our offers such as far as such with financial models are progressing a Saturday and wait for that Savi Yatra formations will continue to enhance the user experiences and created new up.
Speaker Change: Of course, the way, Florida people.
Speaker Change: The actual formation of such and we are seeing encouraging proof of my son, Joseph Mattress thing as we've talked about in the prepared remarks.
Speaker Change: And we believe this will help to drive revenue growth Oh pilot, new monetization opportunities in the Logan 10.
Speaker Change: Also we're habits without T monetize already touched on the Dutch resolves I skipped yeah. It was what she said I don't think it took us out of the total qualities are.
Speaker Change: <unk> our AI.
Speaker Change: Yeah, Paul it's a such features a sufficient cities with fine we'll move forward with monetization.
Speaker Change: With a higher quality you will support us with.
Speaker Change: Opportunities for future growth based on risk factors. So I think that we are reaching a low point of our advertisement business is twice the IRA acting as a sort of gradually improve with the first half of the year performed better than Q4 in the second half of the year.
Speaker Change: Showing further improvement over the first half.
Alex Yao: Thank you Alex.
Speaker Change: Yeah.
Speaker Change: Thank you. Your next question comes from Gary Yu from Morgan Stanley. Please go ahead.
Gary Yu: Thank you would've thought the opportunity. So my question is regarding AI cloud given the strong growth of your core business this quarter.
Gary Yu: Can we expect a continued positive protection going into 2025.
Gary Yu: But in terms of revenue and also profitability.
Gary Yu: What are the main driver behind this momentum and additionally, could management share your outlook on the AI cloud market.
Gary Yu: 25, how should we approach enterprise cloud demand and what incremental opportunities does it bring to defend that thank you.
Gary Yu: Yeah.
Thank you Gary I for your question I'm sorry.
Gary Yu: As Robin mentioned right on our EXL revenue growth accelerated to 26% year over year in Q4 contributing to a full year revenue growth of 17% in 'twenty four.
Gary Yu: Notably a G I relaxed revenue nearly tripled year over year in the 2024.
Gary Yu: This growth was fueled by rising demand for our early and our E infrastructure.
Gary Yu: And as scoring the market is strong with condition, if all protect them at Chipotle.
Gary Yu: Our ship so it's a resort we have successfully attracted a diverse customer base.
Gary Yu: And build a robust pipeline of opportunities.
Speaker Change: So for the AI even for.
Gary Yu: For our structured.
Gary Yu: [noise] established partnerships across diverse sectors.
Gary Yu: Including our inter night, Automotives smart devices manufacturing energy Finance, Utah.
Gary Yu: Utilities, and and you know lots of the AI G C startups.
Gary Yu: Our customer base continues to grow healthily with strong games, among both top tier and mid tier customers.
Gary Yu: Demonstrating our expanding market share in Chinas cloud market.
Gary Yu: On the mass platform churn fun. It provides comprehensive foundation models with our industry, leading Chris and performance.
Gary Yu: So we offer the Ernie family of models from flagship to language. Various you know designed to meet diverse needs and.
Gary Yu: Besides.
Gary Yu: We also provide access to a wide range of high quality Third Party foundation models, including Keepsakes V suite and our one models.
Gary Yu: Thanks to our switched Ikea capabilities and end to end optimization, we can't ensure optimal performance and stability for any models hosted on our platform well maintaining highly competitive pricing.
Speaker Change: So in addition to that chance and provide food site of twos for fine tuning models.
Gary Yu: And building a native apps.
Speaker Change: So that our customers can easily workout solutions catering for their own specific needs.
Speaker Change: So in terms of the market, we believe it will grow.
Speaker Change: Rapidly in.
Speaker Change: 'twenty 'twenty four.
Speaker Change: Hum.
Speaker Change: During the recent Chinese new year holiday, largely hungry modal became a widely discussed topic.
Speaker Change: This not only for their increased public awareness Foundation models.
Speaker Change: But also encourage more people to think differently about how to leverage them to improve their own businesses.
Speaker Change: On the other hand, we're confident that the performance of foundation models, we will continue to improve while the costs we will steadily.
Speaker Change: Client.
Speaker Change: Surely no. This will further lower the barrier to utilize this models.
Speaker Change: So as a result, we believe more and your presses will integrate foundation models into every aspect of their business operations from R&D to production and Tucson.
Speaker Change: Which you can drive explosive epi.
Speaker Change: API calls.
Thereafter, we anticipate increased spending on.
Speaker Change: Baidu AI clubs as well.
Speaker Change: We have also Jerry because I fear twins.
Speaker Change: Pos.
Speaker Change: Consumers.
Speaker Change: Adopted foundation model through API calls I'll have a chance on mass platform.
Speaker Change: <unk> tended to increase their spending on our AD cloud services.
Speaker Change: On the property site.
Speaker Change: Our non-GAAP operating margin continued to expand year over year in Q4, and so we focused on high value opportunities that align with our strategic.
Speaker Change: Priorities.
Speaker Change: Which drives sustainable boost.
Speaker Change: But most robust gross.
Speaker Change: So looking into 2025, we're confident that our EXL revenue Bose, we will maintain strong momentum.
Speaker Change: While continuing to generate positive operating profit.
Harry: Thank you Harry.
Speaker Change: Thank you. Your next question comes from Joe <unk> from UBS. Please go ahead.
Harry: Yeah.
Speaker Change: Hi management. Good evening. Thank you for taking my question I wanted to ask about our margin trend. So given the near term headwinds in core as an increasing mix of cloud revenue.
Speaker Change: How should we think about the core margin levels in the first quarter and also for your 2025 is there any room to further optimize our operating efficiency and also are there any investment plans for the full year that we should be aware of thank you.
Speaker Change: I think you're away from your question Lisa Jackson.
Speaker Change: So despite the near term pressure so we remain optimistic that our strategic yeah investment.
Speaker Change: Or more sustainable impact so we stay focused on improving resilience across all aspects of our business operations and to see encouraging progress across our businesses.
Speaker Change: Well the online marketing business, we expect advertising revenue to gradually improve driven by our plan to monetize all the general search resolved that SKU.
Speaker Change: And also our readiness to capture growth opportunities when some macro improvement.
Speaker Change: Secondly, so far about how business has it has already demonstrated robust growth with continued margin improvement driven by our growing market presence and the competitive advantage that you all have unique scale that's about it for the <unk> architecture and the first death, yeah capabilities.
Speaker Change: So we remain covenant in maintaining the strong momentum going forward.
Speaker Change: Third, while our Intouch Ami business, particularly the robo taxi a poco.
Speaker Change: We remain focused on marine losses, with better operational efficiency and the improved U E. We are also exploring in a way to operational models, including assay lab models.
Speaker Change: Yes, well the investments ended up reaching 2025, we will maintain optimal resource allocation to high growth opportunities, whilst they aligned with our long term strategy.
Speaker Change: Our investments will continue to focus on initiatives that offer both tremendous future opportunities and still highway potential including further advancing earnings capabilities do you pruned the AI transformation with search enhancing our AI cloud offerings and expanding our autonomous driving initiatives.
Speaker Change: As you move forward with these initiatives, we remain committed to enhancing operational.
Speaker Change: Wyszynski and fostering synergies so copies.
Speaker Change: To maximize the impact of these strategic investments. Thank you.
Speaker Change: Thank you. Your next question comes from Brian <unk> from Bank of America.
Speaker Change: Please go ahead.
Speaker Change: Good evening, Thanks management for taking my question. My question is about their robo taxi business can.
Speaker Change: Can management provide updates to bluegrass robo taxi business heading into a 10 25.
Speaker Change: Well other pockets Oh fleet size are you know when the economy and value proposition for our robo taxi business.
Speaker Change: And what do you think the industry is approaching Oh, we're reaching that inflection point and what you'll do with all the competition dynamics.
Speaker Change: Is we are seeing that China's a robo taxi competitors elaborating ecosystem, our strategies with automakers and also a lot shouldnt platforms. So wondering what baidu is approach to compete and scale. Thank you.
Robin: Yeah. This is robin.
Speaker Change: We've invested in autonomous driving technology for over a decade.
Robin: We have turn our vision into reality.
Robin: Screw up Hello goal, we established ourselves as a leading global player in autonomous driving technology.
Robin: We operate in one of the most challenging environments globally.
Robin: China's traffic conditions are among the worst most complex.
Robin: Due to its massive population diverse road conditions dynamic traffic scenarios and.
Robin: And complicated urban layoffs.
Robin: Yeah.
Robin: The price fall right hitting China is about it.
Robin: About like US one seven soft that in the U S. So our successful operation here demonstrates our exceptional technological and operational capabilities.
Robin: We designed the RT six our sixth generation autonomous vehicle from the ground up.
Robin: It is the most cost effective robo taxi vehicle the world has ever seen.
Robin: With this strength as we successfully validated our business model and laid a strong foundation for further scaling and global expansion.
Robin: And in Q4, our political provided approximately $1 1 million rise nationwide.
Robin: That's 36% increase year over year.
Robin: And in January the accumulative right provided to the public exceeded 9 million.
Robin: Furthermore, as Jim mentioned, we achieved 100 per cent food each already has operations in China.
Robin: Which means that we don't have any safety driver.
Hum.
Robin: On the vehicles.
Robin: Anymore. So this is a new industry benchmark.
Robin: It reinforces our leadership in this.
Robin: Yeah.
Robin: As I mentioned earlier.
Robin: November of last year, our political Ah got the Green light to start opening up testing in Hong Kong and this is a important step because Hong Kong is the first is our first you know right hand.
Robin:
Robin: Drive and a lot of hand traffic market.
Robin: It shows.
Robin: Our ability to adapt our autonomous driving technology to different traffic systems.
Robin: Opening doors for expansion into other markets, it's a similar driving setups.
Robin: This ear wellbeing of Paramount E F our expansion.
Robin: We expect to grow our fleet size and white volumes faster than ever.
Robin: As we push forward.
Robin: We.
Robin: We're also actively seeking cooperation opportunities.
Robin: We have identified a variety of potential partners, including mobility service providers local taxi companies third party fleet operators and other.
Speaker Change: Potential Palmer.
Speaker Change: This asset light approach.
Speaker Change: Well allow us to.
Speaker Change: Gil up efficiently while maintaining.
Speaker Change: Flexibility.
Speaker Change: By working with a diverse range of partners, we aim to strengthen our position in the market and bring it home striving to even more people.
Speaker Change: Looking at the broader market.
Speaker Change: As I mentioned in our last earnings call.
Speaker Change: Since the market is still in its infancy.
Speaker Change: Competition actually helps to accelerate the marketing department and foster a more friendly pro innovation regulatory environment.
Speaker Change: And in this growing market our mission.
Speaker Change: It remains clear are delivering.
Speaker Change: Safer more convenient and more comfortable mobility experience for more users.
Speaker Change: Thank you.
Speaker Change: Thank you. Your next question comes from Thomas Chong from Jefferies. Please go ahead.
Thomas Chong: Hi, Good evening, Thanks management for taking my questions.
Speaker Change: Looking into trying to unifi.
Speaker Change: It'll be baidu educate folks for.
Speaker Change: Well a piece in that investment.
Speaker Change: Specifically, it probably started to be allocated across search autonomous driving cloud services and foundation models. Additionally.
Speaker Change: What is management's outlook on <unk> 225 capital expenditures, that's about what shareholders would be time. Thank you.
Yeah.
Speaker Change: Alright. Thank you Thomas this is Jackson.
Speaker Change: So as we evaluate our capital allocation opportunities the internet five so our approach are guided by the following strategic considerations.
Speaker Change: So we will continue to MFC advancing all of it yet.
Speaker Change: This is a long term strategic priority.
Speaker Change: So is that we will further dependency.
Speaker Change: Formation across our.
Speaker Change: Portfolio, particularly search.
Speaker Change: So you are cloud, we aim to drive adoption.
Speaker Change: Infrastructure.
Speaker Change: Mass platform Tampa and early enterprise customers meet their growing demand for their products and solutions as well as Eric's house of it.
Speaker Change: The intent JV. So we are focusing on scaling domestic operations exploring in the V. Chip are please in the model and expanding our international presence, so while ensuring disciplined management and effective loss control.
Well Capex two key priorities of our priority is to drive our decisions.
Speaker Change: Stephanie our technology leadership, and accelerating the adoption of a protest and alcohol services across different sectors.
Speaker Change: So as you ask for shareholder returns, we repurchases over U S wouldn't be named daughters. Since the beginning of a 10 times before which is that can you give us any higher.
Speaker Change: Total buybacks internal history. So in total we have repurchased is U S. $1 7 billion dollar on the hour 5 billion thought up on Chase's program, which runs through December 10 minutes or.
Speaker Change: So going forward, we plan to accelerate our buyback program as part of our ongoing efforts to return value to our shareholders for their enduring trust and support thank you.
Speaker Change: Okay.
Speaker Change: Ladies and gentlemen that is all the time, we have for questions that does conclude our conference for today. Thank you for participating email disconnect.
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