Q1 2025 Baidu Inc Earnings Call

Operator: Hello and thank you for standing by for Baidu's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.

Hello, and thank you for standing by Barbados first quarter, 'twenty 25 earnings conference call.

At this time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session did.

Operator: After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

Today's conference is being recorded if you have any objections you may disconnect at this time.

Juan Lin: I would now like to turn the meeting over to your host for today's conference, Juan Lin, Baidu's Director of Investor Relations. Hello, everyone. Welcome to Baidu's first quarter 2025 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.

Jus Island: I would now like to turn the amazing over to your host for today's conference Jus Island babies director of Investor Relations.

Speaker Change: Hello, everyone and welcome to Baidu first quarter 2025 earnings conference call by those 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 lots of me, a cofounder and CEO dress or Illinois, Oh, EVP and tried up with Baidu mobile ecosystem.

Juan Lin: On the call today, we have Rodney, our co-founder and CEO, Julius Rong Luo, our EVP in charge of Baidu Mobile Ecosystem Group, MEG, Dou Shen, our EVP in charge of Baidu AI Cloud Group, ACG, and Jackson Junjiehe, our interim CFO.

Jus Island: Some groups on EG.

Speaker Change: The ocean, our EVP in charge of Baidu, AI, telcos, ACG and Jeff <unk>, our interim CFO. 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 of the U S Credit Securities Litigation Reform Act of 1995.

Juan Lin: After our prepared remarks, we will hold a Q&A. Please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Credit Security Litigation Reform Act of 1995. Four looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest annual report and other filings with ICC and Hong Kong. Baidu does not undertake any obligation to update any forward-looking statements except as required under applicable law.

Speaker Change: Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations for detailed discussions of these risks and uncertainties. Please refer to our latest annual report and other filings with ICC and Hong Kong stock Exchange Baidu does not undertake any obligation to update any forward looking.

Speaker Change: Statements, except as required under applicable law, our earnings press release and this call include discussions of certain unaudited non-GAAP financial measures <unk> press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures and is available on our IR website at IR Baidu Dot com.

Juan Lin: Our earnings press release and this call include discussions of certain annullated non-GAAP financial measures. Our press release contains a reconciliation of the annullated non-GAAP measures to the annullated most directly comparable GAAP measures and is available on our IR website at ir.baidu.com.

Juan Lin: As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on Baidu.

Speaker Change: As a reminder, this conference is being recorded in addition, a webcast of this conference call will be available on Baidu IR website, I will now turn the call over to our CEO Robin.

Robin Li: I will now turn the call over to our CEO, Robin. Hello, everyone. We kicked off 2025 with a solid start. In the first quarter, Baidu Core's total revenue reached RMB25.5 billion, representing a 7% year-over-year increase. The growth was primarily attributable to the robust performance of our AI cloud. In Q1, AI cloud revenue reached $6.7 billion, increased by 42% year over year, representing a significant acceleration for our cloud business. Such performance reinforces the widespread market recognition of our distinctive AI capabilities, underpinned by our unique four-layer AI architecture, while affirming the ongoing demand for our full-stack end-to-end AI products and solutions.

Speaker Change: Yeah.

Robin: Hello, everyone.

Speaker Change: Kicked off 2025, it's a solid start.

Speaker Change: In the first quarter Baidu Core's total revenue reached RMB 25, 5 billion, representing a 7% year over year increase.

Speaker Change: The growth was primarily attributable to a blow to the robust performance of our AI cloud.

Speaker Change: In Q1.

Speaker Change: Cloud revenue reached 6.7 billion increased by 42% year over year, representing a significant acceleration for our cloud business.

Speaker Change: Such performance reinforces the widespread market recognition of our distinctive capabilities underpinned by our unique poorly or AI architecture, well affirming the ongoing demand for our full stack end to end AI products and solutions.

Robin Li: Notably, AI Cloud accounted for 26% of Baidu core revenue, up from 20% a year ago, reflecting the growing significance of our AI Cloud business within our business portfolio. Throughout the first quarter, I mean rapid evolution across the AI lens. Advancing our AI capabilities remains our core priority. We have accelerated the iteration of our foundation models, allowing us to maintain our leading position as one of the top players in this dynamic field. In March, we released Ernie 4.5 and Ernie X1. 34.5 is our first flagship model with multi-model capability. And it excels at understanding, analyzing, and processing multi-modal content precisely.

Speaker Change: Notably AI cloud accounted for 26% of Baidu core revenue.

Speaker Change: From 20% a year ago, reflecting the growing significance of our AI cloud wins within our portfolio.

Speaker Change: Throughout the first quarter.

Speaker Change: Rapid evolution across the AI landscape.

Speaker Change: Ensing, our AI capabilities remains a core priority.

Speaker Change: We have accelerated the integration of our foundation models, allowing us to maintain our leading position as one of the top players in this dynamic compute.

Speaker Change: In March we released to earn a full point of fine and <unk> X one.

Speaker Change: Already 4.5 is our first flagship model with multimodal capabilities.

Speaker Change: And it excels at understanding analyzing and processing multimodal content precisely.

Robin Li: ErnieX1, our first reasoning model, brings advanced reasoning capabilities with best-in-class function-tackling complex problems with extended chain soft-soft. Notably, both Ernie 4.5 and Ernie X1 come with highly competitive prices. Furthermore, in April at Baidu Create 2025, we unveiled their upgraded version, Ernie 4.5 Turbo and Ernie X1 Turbo.

Speaker Change: Ernie ex won our first reasoning model brings advanced reasoning capabilities.

Speaker Change: Best in class function, calling tackling complex problems with extended Chang soft spot.

Notably, both earning $4 five and earn the X one come with highly competitive pricing.

Speaker Change: Furthermore, in April at Baidu create 2025.

Speaker Change: We unveiled the <unk> upgrade a diversion.

Speaker Change: Ernie full blown five terrible and Ernie X one kerbal.

Robin Li: which feature. Enhanced performance and dramatically lower pricing, making them among the most cost-effective options on the market. Our rapid and continuous cost reductions stem from our unique four-layer AI architecture and full-stack capability. This distinctive architecture enables end-to-end optimization at every layer, spanning infrastructure, framework, models, and applications, allowing us to holistically enhance both performance and efficiency. As a result, we deliver superior performance and stability at highly competitive pricing, positioning us to offer industry-leading foundation models and AI solutions with exceptional price-performance ratio. With stronger capabilities and lower pricing, foundation models are becoming increasingly accessible, enabling diverse applications at scale, and unlocking significant value across industries.

Speaker Change: Which feature.

Speaker Change: Enhanced performance and dramatically lower pricing, making them among the most cost effective options on the market.

Speaker Change: Our rapid and continuous cost reductions stemming from our unique four layer AI architecture and full stack of capabilities.

Speaker Change: This distinctive architecture enables end to end optimization at every layer spanning infrastructure framework models and applications, allowing us to holistically enhance both the performance and efficiency.

Speaker Change: As a result, we deliver a superior performance and stability.

Speaker Change: Highly competitive pricing positioning us to offer industry, leading foundation models and AI solutions exceptional price performance ratio.

Speaker Change: With stronger capabilities, and lower pricing foundation models, becoming increasingly accessible enabling diverse applications at scale and unlocking significant value across industries.

Robin Li: Beyond the model iterations, we are also taking steps to make AI more open and collaborative. As previously announced, we plan to open source our most advanced Ernie 4.5 series of models on June 30. a move that reflects both our technological confidence and our efforts to make Ernie more accessible. In parallel, we are proactively embracing open standards, such as the Model Context Protocol, or MCP, which provides easier access to AI-powered tools and further lowers barriers to AI development. As development becomes simpler, we expect to see a growing number of AI applications emerging on our cloud. Together, these efforts echo our consistent application-driven approach to innovation and our determination to make AI more accessible, applicable, and impactful.

Speaker Change: Beyond them all the way durations. We are also taking steps to make AI more often.

Speaker Change: Collaborative.

Speaker Change: As previously announced we plan to open source, our most advanced earning 4.5 series of models on June 30th.

Speaker Change: That reflects both the art technological confidence and our efforts to make Ernie more accessible.

Speaker Change: In parallel we are proactively embracing open standards, such as the motto context practical or M. C. P, which provides easier access to AI powered tools and further lower the barriers to AI development.

Speaker Change: Yeah.

Speaker Change: Goodbye.

Speaker Change: Simpler, we expect to see a growing number of AI applications emerging on our platform today.

Speaker Change: Together this efforts echo our consistent application driven approach to innovation and our determination to make AI more accessible applicable and impactful.

Robin Li: In our AI Cloud business, we are strengthening Qianfan, our industry-leading mass platform to better support developers and enterprise clients in building models and facilitating AI applications. Qian Fen boosts a comprehensive model library of foundation models. covering nearly all mainstream options on the market. It offers not only our own early family models, but also a wide range of open source and third-party models, including the latest reasoning and multi-model models. This breadth allows individual developers and enterprise clients to choose suitable models with greater flexibility. Importantly, Qianfan provides these models with industry-leading cost effectiveness. when running models like Deep Sea.

Speaker Change: You know, our AI and cloud business, we are strengthening Kim fun.

Speaker Change: Our industry, leading mass platform to better support developers and enterprise clients in building models and facilitating AI applications.

Speaker Change: Chimps and boost our comprehensive model Library of foundation models.

Speaker Change: [noise] covering nearly all mainstream options on the market at.

Speaker Change: It all for not only our own Ernie family them off models, but also a wide range of open source and third party models, including the latest reasoning and multimodal models.

Speaker Change: This breadth allows individual developers and enterprise clients to choose suitable model with greater flexibility.

Speaker Change: Importantly, <unk> provides this small dose with industry leading cost effectiveness.

Speaker Change: We're running models like deep seek.

Robin Li: Qianfan achieved what we believe to be some of the lowest inference costs in the industry today with lightning speed and massive concurrency. TFN also delivers an expanding toolchain, continuously enriched to provide the most comprehensive and user-friendly toolkits for AI development. This quarter, complementing our existing App Builder, Model Builder, and Agent Builder, we introduced Data Builder to support AI data processing and preparation, while rolling out system-wide upgrades across the entire toolchain to further improve efficiency and ease of use. First, we enhanced the model builder to support the customized development of reasoning models by incorporating advanced training techniques, including reinforcement learning methods like RFT and GRTO.

Speaker Change: Chamberlain achieved what we believe to be some of the lowest the insurance cost in the industry today with lightning speed and massive concurrency.

Speaker Change: Japan also delivered an expanding tool chain.

Speaker Change: Yes, the in reach to provide the most comprehensive and user friendly toolkit for a antibody fragment.

Speaker Change: This quarter complementing our existing builder model builder and agent would be whatever we introduced paid up EBITDAR to support a high data processing and preparation while rolling out system wide upgrades across the entire tool chain to further improve efficiency and ease of use.

Speaker Change: First we enhanced the motto.

Speaker Change: To support its customized us department of reasoning models by incorporating advanced training techniques, including lean.

Speaker Change: Reinforcement learning Messrs like our F T and Jacques Hill.

Robin Li: Second, we extended our fine-tuning capabilities to multi-model models, offering multi-model reinforcement learning techniques and enabling full process support from model building and training to evaluation and development.

Speaker Change: Second we extended our fine tuning capabilities to multimodal models offering multimodal reinforcement learning techniques and enabling full par says support from model building and training to evaluation and development.

Robin Li: Third. As foundation models grow in size, model distillation has become essential for enterprise adoption. Hence, we introduced a one-click distillation feature that streamlines the previous multi-step process. With our expanded model library now covering reasoning models, enterprise clients can effortlessly build smaller models that maintain reasoning capabilities with reduced costs, making it easier to adopt advanced AI technology. Together, these enhancements significantly strengthen Chiang Kai-shek's toolchain. Lowering the barriers for AI adoption and enabling faster, more efficient innovation across diverse use cases. On our legacy consumer-facing product, Baidu Search, we accelerated its AI transformation with an unrelenting focus on enhancing user experience.

Speaker Change: Third.

Speaker Change: Our foundation models grow in size model distillation has become essential for enterprise adoption.

Speaker Change: We introduced a one click distillation feature that streamlines the previous multi step process.

Speaker Change: Our expanded Marlboro Library now come rain recently models enterprise clients can effortlessly build smaller mono that maintain.

Speaker Change: Reasoning capabilities with reduced costs, making it easier to adopt advanced AI technology.

Speaker Change: Together this enhancement significantly strengthen chamberlain's talking.

Speaker Change: Lowering the barriers for AI adoption, and enabling faster more efficient innovation across diverse use cases.

Speaker Change: Our legacy consumer facing product Baidu search, we accelerated its AI transformation with an unrelenting focus on enhancing user experience our journey exemplifies how complex AI capabilities can be applied to create meaningful.

Robin Li: Our journey exemplifies how complex AI capabilities can be applied to create meaningful improvements that directly benefit our hundreds of millions of users. After exploring and validating for several quarters, and with consistent positive user feedback, we established a relatively mature and scalable product framework for our AI, for our GenAI-enabled search early. Building on this, we are determined to further accelerate the AI transformation of search. In April, about 35% of mobile search results pages contain AI-generated content. increasing from 22% in January. We are further enhancing the search experience by prioritizing multi-modal content, including images, videos, agents, digital humans, and live streaming.

Speaker Change: That directly benefit our hundreds of millions of users.

Speaker Change: After exploring and validating for several quarters and with consistent positive user feedback, we established a relatively mature and scalable product framework for our AI.

Speaker Change: File or to an AI enabled search already this year.

Speaker Change: On this we are determined to further accelerate the transformation of search.

Speaker Change: And now your point about 35%.

Speaker Change: Mobile search result pages containing AI generated content, increasing from 22% in January.

Speaker Change: We are further enhancing the search experience by prioritizing multimodal content, including images videos agents digital humans and live streaming.

Robin Li: We believe this is a more effective way to present search results, as it aligns with evolving user preferences and better addresses the growing complexity of search queries. The distribution of multi-modal content has been rapidly increasing. This trend reflects our continued progress in delivering a more intuitive and effective search experience. Also, the volume of content accessible within Baidu has continued to expand, particularly with the empowerment of foundation models. One example is AI-generated digital human beings. which have surged over 30 fold from the beginning of 2025 through April in just a few months. The growing volume of content enriches what users can discover and provides access to a more expansive information landscape.

Speaker Change: We believe this is a more effective way to present search results as it aligns with evolving user preferences and better address the growing complexity of search queries.

Speaker Change: The distribution of multimodal content has been rapidly increasing.

Speaker Change: This trend reflects our continued progress in delivering a more intuitive and effective search experience.

Speaker Change: Also the volume off content accessible within Baidu has continued to expand particularly Mr. Empowerment of foundation models.

Speaker Change: One example is AI generate digital human videos.

Speaker Change: Which have surged over 30 forward from the beginning of 2025 through April in just a few miles.

Speaker Change: The growing volume of content and richest what users can discover and provides access to a more expensive information landscape.

Robin Li: Our efforts have led to consistent improvements in user experience. Users exposed to AI-generated search results find their search intent fulfilled more easily and quickly. indicating they get the desired information more efficiently. These users are also increasingly inclined to search for more varied questions or topics. have demonstrated higher retention over time. We're delighted to see more users can enjoy this improvement. In March, the MAU of Baidu app increased by 7% year over year, reaching 724 million. We firmly believe that agents and intelligent digital humans represent promising real-world applications of AI technology that will open up vast market opportunities ahead.

Speaker Change: Our efforts have led to consistent improvements in user experience.

Speaker Change: Users exposed to AI generated this search without find their search intent fulfilled more easily and quickly.

Speaker Change: Indicating they get the design information more efficiency.

Speaker Change: The users are also increasingly inclined to search for more varied questions or topics.

Speaker Change: We have demonstrated higher retention over time.

Speaker Change: We are delighted to see more users can enjoy this improvement in March the Ami you off Baidu app increased by 7% year over year, reaching 724 million.

Speaker Change: We firmly believe that agents and intelligent.

Speaker Change: No humans represent promising railway applications of AI technology that will open up that market opportunities ahead.

Robin Li: Last quarter, I introduced the convergence of agents and intelligent digital humans. a powerful combination that brings together foundation models, capabilities, and digital human technology. Today, they are already widely deployed throughout our mobile ecosystem, effectively supporting different scenarios across industries. At our recent Baidu Create 2025, I further introduced an upgraded version of intelligent digital human with hyper-realistic interactions, delivering natural conversation with vivid facial expressions and fluid human-like gestures. In the future, we believe they can match or even outperform humans in certain scenarios.

Speaker Change: Last quarter I introduced at the convergence of agents and intelligent digital humans.

A powerful combination that brings together foundation models capabilities and digital human technology.

Speaker Change: Today, they are already widely deployed throughout our mobile ecosystem effectively supporting different scenarios across industries.

Speaker Change: And our recent Baidu create 2025 I further introduced an upgraded version of intelligent digital human it's hyper realistic interactions delivering natural conversation with vivid facial expressions and Floyd human like gestures.

Speaker Change: In the future, we believe they can match or even outperform humans in certain scenarios.

Robin Li: We're preparing to launch and scale our next generation hyper-realistic digital humans into production soon.

Speaker Change: We are preparing to launch and scale, our next generation hyper realistic digital humans into production soon.

Robin Li: Now turning to intelligent driving, which represents another compelling frontier of our AI applications in the physical world. As highlighted last quarter, ApolloGO, our autonomous ride hailing service, has successfully validated its BINS model in the key operational region with highly complex transport conditions and cost-sensitive local passengers. and it has achieved 100% fully driverless operations in mainland China. This gives us strong confidence to expand into international markets with higher pricing for ride-hailing services. where we aim to replicate and further optimize our proven approach. In Q1, we reached critical milestones in international expansion with Apollo Go entering both Dubai and Abu Dhabi, aiming to provide safe, comfortable, and affordable autonomous ride-hailing services in this booming market.

Speaker Change: Now turning to intelligent driving which represents another compelling frontier of our AI applications in the physical world.

Speaker Change: As highlighted last quarter, our polo goal, our autonomous ride hailing service has successfully validated it's been small though in the key operational reach them with highly complex transport conditions and cost sensitive local passengers.

Speaker Change: And it has achieved 100% fully driverless operations in mainland China.

Speaker Change: This gives us strong confidence to expand into international markets with higher pricing for ride hailing service.

Speaker Change: We aim to replicate and further optimize our proven approach.

Speaker Change: In Q1, we reached a critical milestones in international expansion with a polo golf entering both Dubai and Abu Dhabi aiming to provide the safe comfortable and affordable autonomous ride hailing services in this booming market.

Robin Li: In May, we began open road validation testing in Dubai, and we expect to start testing in Abu Dhabi soon. Meanwhile, we have also expanded our testing area in Hong Kong and obtained permission to conduct open road testing with designated passengers in April. with over 1,000 fully driverless vehicles now deployed globally. We continue to solidify our position as the world's leading autonomous ride-hailing service provider. We are scaling up our services globally. Looking ahead, we will deepen our presence in existing markets while strategically entering new ones, capturing broader growth opportunities worldwide.

Speaker Change: In May we began open road validation testing in Dubai, and we expect to start testing in Abu Dhabi soon.

Meanwhile, we have also expanded our testing area in Hong Kong and obtained permission to conduct an open road testing with designated the passengers in April.

Speaker Change: It's over a thousand fully driverless vehicles now deployed globally, we continue to solidify our position as the worlds leading at homes ride hailing service provider.

Speaker Change: We are scaling up our services globally.

Speaker Change: Looking ahead, we will deepen our presence in existing markets, well strategically entering new ones capturing broader growth opportunities worldwide.

Robin Li: Now, let me review the key highlights for each business for the first quarter. AI cloud revenue reached 6.7 billion in Q1, delivering a strong year-over-year increase of 42% with non-GAAP operating profit remaining positive. Gen AI and foundation model related revenue recorded a triple digit year over year growth. As accelerating AI adoption across multiple sectors drove a notable increase in customer demand for our highly cost effective AI cloud services. As mentioned earlier, we also upgraded our math platform, Qianfan, with an expanded model library and more comprehensive toolkits, extending support for the training and fine-tuning of multi-modal and reasoning models to further facilitate AI-native application development.

Speaker Change: Now, let me review the key highlights for each business for the first quarter.

Speaker Change: Cloud revenue reached 6.7 billion in Q1, delivering a strong year over year increase of 42% with non-GAAP operating profit remaining positive.

Speaker Change: I and foundation motto related revenue recorded triple digit year over year growth.

Speaker Change: Accelerating AI adoption across multiple sectors involved a notable increase in customer demand for our highly cost effective AI cloud service system.

Speaker Change: As mentioned earlier, we also upgraded our mass platform chance I'm with an expanded model library and more comprehensive toolkit extending support for the training and fine tuning, our multimodal and wisley models to further facilitate AI 19 application development.

Robin Li: On applications, you may recall that at Baidu World last October, we previewed Miaoda, which delivers no-code capabilities. In this quarter, we officially launched Miaoda, making it available to everyone, programmer or not. Miao Dao reflects our vision to democratize AI and empower more people outside the developer community to create innovative applications with natural language .

Speaker Change: Applications.

Speaker Change: <unk>.

You may recall that at Baidu World and last October we previewed now, which delivered norco capabilities and this quarter, we officially launched a meltdown.

Speaker Change: <unk> available to everyone programmer or not.

Speaker Change: Now that reflects our mission to democratize AI and empower more people all sides of the developer community.

Speaker Change: H innovative applications with natural language inputs.

Robin Li: . The growing market recognition of our AI expertise continues to drive strong customer growth. In Q1, we deepen our collaboration with existing clients while also expanding our customer base with new partnerships. We worked with a wide range of leading enterprises, such as China Merchant Group, and a top e-commerce company in China, further validating our position as the AI partner of Troy. Our client pipeline remains healthy. We saw strong growth in the automotive sector and began expanding into emerging verticals. such as embodied artificial intelligence. where we recently entered into a strategic partnership with Beijing Humanoid Robot Innovation Center, the developer of the Tiangong Ultra Humanoid Robot.

Speaker Change: The growing market recognition of our AI expertise continues to drive strong customer growth.

Speaker Change: In Q1, we deepen our collaboration with existing clients, while also expanding our customer base with new partnerships.

Speaker Change: We worked with a wide range of leading enterprises, such as China merchant group and top E Commerce company in China further validating our position as the AI partner of choice.

Speaker Change: Our client pipeline remains healthy we saw strong growth in the automotive sector and began expanding into emerging verticals.

Speaker Change: Such as embodied artificial intelligence.

Speaker Change: Where we recently entered into a strategic partnership with Beijing humanoid robots innovation Center.

Speaker Change: The developer of the Kingdom ultra humanoid robot.

Robin Li: For our mobile ecosystem, we accelerated the AI transformation of search in Q1 while continuing to improve the efficiency of our monetization approach. Agents continue to demonstrate enhanced efficiency as a monetization channel for our advertising business. In March, over 29,000 advertisers had daily ad spending through agents. with many demonstrating increased willingness to allocate more of their ad budget to our agency. Adoption spans sectors like healthcare, education, lifestyle services, B2B, real estate, and business services, including legal services. In Q1, revenue generated by our agents for advertisers increased 30-fold year-over-year, accounting for 9% of Baidu Core's online marketing revenue.

Speaker Change: For our mobile ecosystem, we accelerated the transformation of search in Q1, while continuing to improve the efficiency of our monetization approaches.

Speaker Change: Agents continue to demonstrate enhanced efficiency asset monetization channel for our advertising business.

Speaker Change: In March over 29000 advertisers had daily AD spending through agents.

Speaker Change: Many demonstrating increased willingness to allocate more off the air and budget to our agents.

Speaker Change: Adoption spans sectors like health care education lifestyle services, B to B real estate and business services, including vehicles services.

Speaker Change: In Q1 revenue generated by our agents.

Speaker Change: For advertisers increased 30 fold year over year.

Speaker Change: Accounting for 9% of Baidu Core's online marketing revenue.

Speaker Change: Yeah.

Robin Li: On the other hand, our industry-leading intelligent digital humans have proven their transformative value across the scenario. For example, our digital humans serve as live-streaming hosts for merchants on our platform. Over the past few quarters, tens of thousands of such digital humans have been live-streaming on our platform every month, serving not just merchants, but also expanding into fields like legal services, healthcare, education, and more. Turning to intelligent driving, as just highlighted, Apollo Go made solid progress with its international expansion. Following our entry into Dubai and Abu Dhabi, our global footprint now spans 15 cities. Backed by our validated business model and proven operational expertise, we aim to further broaden our presence across more cities globally.

Speaker Change: On the other hand, our industry, leading intelligent digital human have proven the air transport made them value across Sinfonia Ralph for.

Speaker Change: For example, our digital humans serve as live streaming hosts for merchants on our platform over the past few quarters tens of thousands of such digital humans, how being live streaming on our platform every month, serving not just our merchants, but also spending into fields like legal services health care.

Speaker Change: Her education and more.

Speaker Change: Turning to intelligent driving as just highlighted a portal go made solid progress with its international expansion following our entry into Dubai, and Abu Dhabi, Our global footprint now spans 15 cities backed by our validated the business model and proven operational expertise.

Speaker Change: We aim to further broaden our presence across more cities globally.

Robin Li: In terms of light volume, we are seeing clear acceleration. Apollo Gold provided approximately 1.4 million rides to the public in Q1, representing a robust year-over-year growth of 75%. As of May 2025, the cumulative rides provided to the public have exceeded 11 million. Meanwhile, we continue to scale up our service capabilities in cities where we have long been operating. Also, we are exploring asset-light bins models as a key strategic direction for our future growth. And we have started to see early adoption in certain areas with In May, ApolloGo entered into a long-term strategic partnership with Car Inc., China's leading auto rental service provider, to introduce fully autonomous vehicle rental services and explore new models for smart mobility together.

Speaker Change: In terms of volume, we are seeing clear acceleration.

Speaker Change: Apollo go provided approximately $1 4 million rides to the public in Q1, representing a robust year over year growth of 75%.

Speaker Change:

Speaker Change: As of May 2025, the accumulative rights provided that to the public have exceeded 11 million means.

Speaker Change: Meanwhile, we continue to scale up our service capabilities in cities, where we have long been operating.

Speaker Change: Also we are exploring asset light business models as a key strategic direction for our future growth and we have started to see early adoption in certain areas recently.

Speaker Change: He may Apollo go entered into a long term strategic partnership with car, Inc. China's leading auto rental services provider to introduce fully autonomous vehicle rental services and explore new models for smart mobility together.

Speaker Change: Yeah.

Robin Li: As our technology and operations mature at scale, we see significant opportunities and commercial sustainability across more use cases and regions. Combined with our regionally validated BIMS model and global expansion efforts, we believe we are well positioned to create substantial value and reshape the future of mobility in the coming years.

Speaker Change: As our technology and operations mature scale, we see significant opportunities in the commercial assistant ability across more use cases and reagents.

Speaker Change: Combined with our regionally validated pins model and global expansion efforts. We believe we are well positioned to create substantial value and reshape the future of mobility in the coming years.

Robin Li: Looking back at the quarter's development. We are seeing encouraging progress in AI applications across the board, from enterprise services to consumer-facing products and intelligent mobility. AI technologies are beginning to generate tangible, meaningful value through applications, which embodies the ultimate goal of our application-driven innovation and aligns perfectly with our long-standing strategic focus on AI.

Speaker Change: Looking back at the quarters do you buy it from and.

Speaker Change: We are seeing encouraging progress in AI applications across the board from enterprise services to consumer facing products and intelligent mobility.

Speaker Change: AI technologies are beginning to generate tangible meaningful value through applications, which embodies the ultimate goal of our application driven innovation and aligns perfectly with our long standing strategic focus.

Jackson Junjiehe: With that, let me turn the call over to Jackson to go through the financial results. Thank you, Robin. So now let me walk through the details of this quarter's financial results. Total revenues were RMB32.5 billion, increasing 3% year over year. Revenue from Baidu Corp was RMB 25.5 billion, increasing 7% year over year. Baidu Core's online marketing revenue was RMB 16.0 billion, decreasing 6% year-over-year. Baidu Core's non-online marketing revenue was RMB 9.4 billion, up 40% year-over-year, mainly driven by AI cloud business. Within Baidu Core's non-online marketing revenue, AI Cloud's revenue was RMB 6.7 billion, increased by 42% year-over-year, and accounted for 26% of Baidu Core's revenue.

Speaker Change: With that let me turn the call over to Jackson to go through the financial results.

Jackson: Thank you Robyn So now let me walk through the details of our first quarter financial results.

Speaker Change: Total revenues were RMB.

Jackson: The $32 5 billion, increasing 3% year over year.

Jackson: Revenue from Baidu core was RMB, 25, 5 billion, increasing 7% year over year.

Jackson: Two cost online marketing revenue was RMB 16 plants their opinion decreasing 6% year over year Baidu Core's long online marketing revenue was RMB nine 4 billion up 40% year over year, mainly driven by AI cloud business.

Jackson: Using baidu core online marketing revenue cloud revenue was RMB six 7 billion increased by 42% year over year and accounted for 26% Oh Baidu core revenue.

Jackson Junjiehe: Revenue from ITE was RMB 7.2 billion, decreasing 9% year-over-year. Cost of revenues was RMB 17.5 billion, increasing 14% year-over-year, primarily due to an increase in costs related to AI cloud business and traffic acquisition costs. Operating expenses were RMB10.5 billion, decreasing 3% year-over-year, primarily due to a decrease in personnel-related expenses, partially offset by the increase in channel spending and promotional marketing expenses. Baidu Co's operating expenses were RMB9.1 billion, decreasing 4% year-over-year. Baidu Core SG&A expenses were RMB 4.9 billion, increasing 10% year-over-year. SG&A accounted for 19% of Baidu Core's revenue in the quarter, which is basically flat from last year.

Jackson: Revenue from GE was RMB, seven 2 billion decreasing 9% year over year cost of revenues was RMB 17, 5 billion, including putting spend year over year, primarily due to an increase in costs related to <unk> business and the acquisition costs.

Operating expenses were RMB, 10, 5 billion decreasing 3% year over year, primarily due to a decrease in personnel related expenses, partially offset by the increase in channel spending and promotional marketing expenses.

Jackson: Two costs operating expenses were RMB, nine 1 billion, increasing 4% year over year.

Jackson: Baidu core SG&A expenses were RMB, four 9 billion, increasing 10% year over year.

Jackson: <unk> accounted for 19% of Baidu cluster revenue quarter, which was basically flat from last year.

Jackson Junjiehe: Baidu Core R&D expenses were RMB 4.9 billion, decreasing 16% year-over-year. R&D accounted for 16% of Baidu Core's revenue in the quarter, compared to 21% in the same period last year. Operating Income was RMB 4.5 billion, Baidu Cost Operating Income was RMB 4.2 billion, and the Baidu Cost Operating Margin was 16%. Non-Gap Operating Income was RMB 5.3 billion, Non-Gap Baidu Co-Operating Income was RMB 4.9 billion, and Non-Gap Baidu Co-Operating Margin was 19%. Total added income net was RMB4.5 billion, increasing 260% year-over-year, mainly due to an increase in fair baidu gain and pickup of earnings from launching investment.

Jackson: Baidu core IMT extensive work on the $4 9 billion.

Jackson: And the 16% year over year.

Jackson: R&D Congress was 16% or Baidu clubs revenue in the quarter compared to 21% in the same period last year.

Jackson: Operating income was RMB four 5 billion by two cost operating income was RMB four 2 billion.

Jackson: Baidu core operating margin was 16%.

non-GAAP operating income was RMB five 3 billion noncash Baidu core operating income was RMB four 9 billion, an uncapped baidu core operating margin was 19%.

Jackson: Total other income net was RMB, four 5 billion, including 216% year over year, mainly due to an increase in satellite okay and pick up of earnings from launching your management costs are they upset by the decreased net foreign exchange gains arising from exchange rate fluctuation, but change in Indiana.

Jackson Junjiehe: are partially upset by the decrease in non-foreign exchange gains arising from exchange rate fluctuation between the renminbi and the US dollar. Income tax expense was RMB 1.2 billion compared to RMB 883 million in the same period last Net income attributable to Baidu was RMB 7.7 billion and diluted earnings per ADF was RMB 21.59. Net income attributable to Baidu Core was RMB 7.6 billion and net margin for Baidu Core was 30%. Non-GAAP net income attributable to Baidu was RMB 6.5 billion. Non-GAAP diluted earnings per 8 years was RMB 18.54. Non-GAAP net income attributable to Baidu Core was RMB 6.3 billion.

Jackson: U S dollar.

Jackson: Income tax expense was RMB, one 2 billion compared to RMB 883 million in the same period last year.

Jackson: Net income attributable to Baidu was RMB seven 7 billion and diluted earnings per ADR was RMB 20, 159 net income attributable to Baidu core was RMB seven 6 billion and net margin for Baidu call it 30%.

Jackson: non-GAAP net income attributable to Baidu RMB, six 5 billion non-GAAP diluted earnings per ads.

Jackson: But on the 18th qualified for non-GAAP net income attributable to Baidu core was RMB six 3 billion and non-GAAP net margin for Baidu core was 25%.

Jackson Junjiehe: And non-GAAP net margin for Baidu Core was 25%. As of March 31, 2025, cash, cashier credit, receipt cash, and short-term investments were RMB 142.0 billion. And cash, cash equivalent, residual cash, and the short-term investment, excluding ITE, were RMB 136.7 billion. Free cash flow was negative RMB 8.9 billion, and the free cash flow excluding ITE was negative RMB 9.2 billion, mainly due to an increase of investments in AI business. We define net cash position as total cash, cash equivalent, reserve cash, short-term investment net, long-term time deposit, and how to maturity investment, and others. Last, Total Loans, Convertible Senior Loans, and Loans Payable.

Jackson: As of March 31st 2025, cash cash equivalent reshape tests and saw some of your best months was RMB 142.0 premium.

Jackson: And the test testing of coated residual cash and short term investments, excluding I E well RMB $136 7 billion.

Jackson: Free cash flow was next to RMB, eight 9 billion and the free cash flow. Excluding ICU was next to RMB nine 2 billion.

Jackson: Due to an increase of investments in AI business.

Jackson: We define net cash position as total cash cash equivalents, which is cash so it's something.

Jackson: That lump sum turnkey puppies and the held to maturity investments in August.

Jackson: Total loans, how much of those senior notes and notes payable.

Jackson Junjiehe: As of March 31, 2025, net cash acquisition for Baidu was RMB159.0 billion. Baidu Corp had approximately 31,000 employees as of March 31, 2025.

Jackson: As of March 31st 2075, net cash position for Baidu was RMB 115, 9.0 PGM.

Jackson: Baidu core.

Jackson: Trust me today is 31000 employees as of March 3400, 75.

Jackson Junjiehe: Finally, since last year, we have accelerated our share repurchase program. From the beginning of Q1 2025, we have purchased a total of U.S. dollars 445 million of our shares, reflecting our longstanding commitment to delivering long-term value to shareholders.

Jackson: Finally, since last year, we have accelerated our share repurchase program from the beginning of Q1 'twenty five.

Jackson: A total of USD $445 million of our shares.

Jackson: Our long standing commitment to delivering long term value to shareholders.

Operator: With that, operator, let's now open the call to questions. 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, please press star 2.

Jackson: With that operator, let's now open the call to questions.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.

Speaker Change: If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker Change: You wish to cancel your request please press star two.

Alicia Yap: Your first question comes from Alicia Yap with Citigroup. Please go ahead. Thank you. Good evening, Robin, Jackson, Chen, and management. Thanks for taking my questions.

Speaker Change: Your first question comes from Alicia Yap with Citigroup. Please go ahead.

Alicia Yap: Thank you.

Speaker Change: Robin Cheng Cheng.

Speaker Change: Management, Thanks for taking my questions I wanted to ask about Oh model. So given the rapid pace off the model E iterations and also your upcoming open source strategy can management share the latest update on your <unk>, Oh, well on our strategy and then why don't you.

Robin Li: I wanted to ask about the AI model. So given the rapid pace of the model iterations and also your upcoming open source strategy, can management share the latest update on your AI overall strategy? And then what is the technology roadmap for earning in 2025? Will Baidu continue iterating on the foundation model such as, you know, the earning 5.0, for example? Can you further reduce inference costs going forward? Thank you.

Speaker Change: The technology, well that well I mean 2025.

Speaker Change: Well Baidu continue <unk> the foundation model such as the <unk> five point as you know for example can.

Speaker Change: Can you sort of reduced insurance costs going forward. Thank you.

Robin Li: Hi Alicia, this is Robin. Over the past few months, we've seen an accelerated iteration of foundation models. But no matter how fast the models advance, I think one thing is always clear.

Robin: Hi, Alex this is robin.

Robin: Over the past few months, we've seen an accelerated our integration of foundation models.

Robin: But no matter how fast are models that band. So I think one thing is always clear.

Robin Li: The true value of foundation models ultimately lies in applications built on the model. That's why we stick to an application-driven approach for innovation. The foundation model space is very broad, so we don't necessarily have to make early lead in every possible direction. Instead, we strategically focus our model iteration efforts on areas with real application matters. where we can build the most competitive capability. For example, we make sure our model development matches what our products actually need. For over one year, we've been using foundation model to drive AI transformation across our mobile ecosystem, including search. This hands-on experience has shown us which model capabilities bring real value and are worth prioritizing.

Robin: The true value of our foundation models ultimate lysine applications built on the models.

Robin: That's why we stick to an application driven approach for innovation.

Robin: The Foundation model space is very broad so we don't necessarily.

Robin: Have to make Ernie lead in every possible direction.

Robin: Instead, we.

Robin: We strategically focus our motto integration efforts.

Robin: Areas with a real application Madam.

Robin: Where we can viewed the most competitive capabilities.

Robin: For example, we make sure our model Goodbye for Mint matches, what our products actually need.

Robin: For over one year we've.

Robin: Using foundation model to drive AI transformation across our mobile ecosystem.

Robin: Including search.

Robin: This hands on AR experiences have shown us, which model capabilities bring real value and our worst prioritizing.

Robin Li: like multimodality. We've also spotted some promising application areas. Take our digital humans, for instance. by combining different model capabilities. We've created hyper-realistic digital humans that can even perform better than real humans. in certain situations.

Robin: Multi modality.

Robin: Yeah.

Robin: We've also spotted some promising application areas.

Robin: Take our digital humans for instance.

Robin: By.

Robin: Combining different model capabilities.

Robin: We've created hyper realistic just on humans that can even performed better than real human in certain situations.

Robin Li: We'll be rolling them out at scale soon, opening up their value in many years.

Robin: We'll be rolling them out at scale as soon.

Robin: Opening up their value in many.

Robin Li: my new new scenario. On Ernie's technology roadmap, we're set to continue the evolution of Ernie. We're already working on the next generation of models and we expect to further accelerate our pace of model iteration. And back to your question on inference cost, yes, we absolutely believe we can keep driving down cost. In fact, each new model we've launched recently has come with significant price cuts. As I mentioned before, we released Ernie 4.5 and X1 in March. X1 matched DeepSeek R1's performance at only half the price. Then about a month later, we rolled out turbo versions with better performance and even more aggressive pricing.

Robin: New new scenario.

Robin: Earnings technology roadmap.

Robin: We're set to continue the evolution of earnings we're already working on the next generation on floor models, and we expect to further accelerate our pace up model iteration.

Robin: And back to your question on insurance costs, Yes, we absolutely believe we can keep driving down costs.

Robin: In fact, each new model, we've launched recently.

Robin: Have come with significant price cuts.

Robin: As I mentioned before we released earnings for five and X one in March.

Robin: X one matched deep CCAR once the performance at only half the price.

Robin: And then about a month later, we bought out turbo versions with better performance.

Robin: And even more aggressive pricing.

Robin Li: Ernie 4.5 Turbo at 80% lower price than 4.1 and Ernie X1 Turbo at half the price of Ernie X1 Turbo. This price cuts are supported by our, you know, full stack AI capabilities to continuously lower inference costs. making our model one of the most cost effective options on the market. We're also opening up our best capabilities to the broader community.

Robin: Only $4 five turbot at 80% lower price than.

Robin: For one month.

Robin: And or an excellent horrible at half the price.

Robin: Excellent.

Robin: This price cards are supported by our full stack AI capabilities.

Robin: To continuously lower insurance costs.

Robin: Our model one of the most cost effective options on the market today.

Robin: We're also opening up.

Robin: Our vast capabilities to the broader community. So we are on track to open source or any full 0.5 series on June 30th.

Robin Li: So we're on track to open source Ernie 4.5 series on June 30. And we are excited to see market's response and look forward to more people exploring what Ernie can do. Ultimately, we hope this helps more users experience the true value of our models and explore new real-world applications.

Robin: And we are excited to see market response, and look forward to more people exploring what Ernie can do.

Robin: Ultimately we hope this helps more users experience the true value of our models and our extra.

Robin: Explore new real world applications.

Robin: Thank you.

Lincoln Kong: Your next question comes from Lincoln Kong with Goldman Sachs, please go ahead. Thank you management for taking my questions. My question is about the cloud business. So we have seen a very strong growth in the first quarter for the cloud revenue. So what are the key drivers for this strong growth? So how should we think about sustainability here?

Lincoln Tong: Your next question comes from Lincoln Tong with Goldman Sachs. Please go ahead.

Robin:

Lincoln Tong: Hi, Thank you management for taking my questions. My question is about the cloud business. So we have seen a very strong growth in the first quarter for cob revenue. So what are key drivers for this strong growth. So how should we think about our sustainability here and also could management provide us a breakdown in terms of.

Dou Shen: And also could the management provide us some breakdown in terms of the by category, for example, like infrastructure, industry solutions, project-based service, and as well as this personal cloud? So how should we think about the outlook for the growth, as well as the profitability within 2025 for cloud?

Speaker Change: Uh huh.

Speaker Change: The bike category for example, like a infrastructure industry solutions project base to service and that's why I said, it's a personal cloud.

So how should we think about the outlook.

Speaker Change: But it grows that's what I was said profitability within 2025 carload business and lastly.

Dou Shen: And lastly... You know, with the recent tightening of our U.S. export restrictions on those advanced AI chips, so what are the potential impacts here on Baidu cloud operation and our growth plan? Thank you.

Speaker Change: With the recent tightening up our U S export restrictions I dunno, how advanced chips. So what are the potential impact here baidu cooperation and that our growth strategy. Thank you.

Dou Shen: This is Dou. Thank you for your question. In Q1, our AI cloud revenue growth further accelerated from a 26-year-over-year growth in Q4 last year to a 42-year-over-year, mainly driven by a certain demand for gene AI and foundation models across industries for both training and inference. So as foundation models have undergone faster iteration recently, we have seen a fast increase in model training needs, not just for large language models, but also for other types of models. Customers are increasingly choosing Baidu AI Cloud for our recognized leadership in AI infrastructure and our enhanced mass platform Qianfan, which consistently lowers inference costs and improves toolchain efficiency.

Speaker Change: This is adult thank you a question.

Speaker Change: In Q1, our E I call revenue growth further accelerated to from a 26 year over year growth in Q4 last year to a 42 year over year, our mainstream and by surging demand for Jimmy I and foundation models across industries for both training and inference.

Speaker Change: <unk>.

Speaker Change: So its foundation models have undergone iteration recently, we have seen a fast increase in motor training nice not just for a large nangry models, but also for other types of models.

Speaker Change: Customers are increasingly choosing baidu a college for our recognized leadership in E. I mean, Chris Clark true Hum mass platform Kimpton.

Speaker Change: Which consistently lower insurance costs.

Speaker Change: <unk> efficiency.

Dou Shen: In terms of the revenue breakdown, Baidu AI Cloud primarily consists of two parts, personal cloud and enterprise cloud. And enterprise cloud contributes to the vast majority of AI cloud revenue, which has consistently outgrown overall AI cloud. And then within the enterprise cloud, we have subscription-based and project-based revenue. For the subscription-based revenue, it currently accounts for the majority of the enterprise cloud revenue, providing a sustainable revenue stream. Among subscription-based revenue, GEI-related revenue has maintained triple-digit year-over-year growth for several consecutive quarters. Project-based revenue may fluctuate from time to time. But in the long run, we believe the proportion for subscription-based revenue will continue to rise.

Speaker Change: In terms of the revenue breakdown Baidu AI cloud primarily consist with two pars personal cloud and enterprise cloud.

Speaker Change: And enterprise cloud contributes to the.

Speaker Change: Vast majority if he had called revenue, which has consistently outgrown Uruguay club.

Speaker Change: And then within the enterprise cloud.

Speaker Change: We have subscription based and project based revenue.

Speaker Change: Subscription based revenue. We're currently accounts for the majority if the enterprise cloud revenue, providing a sustainable revenue stream.

Speaker Change: Among our subscription based revenue G. I released revenue has maintained triple digits year over year growth for several.

Speaker Change: Second two quarters.

Speaker Change: Project based revenue may fluctuate from time to time, but he has a long long we believe with the proportion for a subscription based revenue will continue to rise.

Dou Shen: supporting more sustainable and healthier long-term growth for our cloud business. On the profit side, AI Cloud's non-gap operating margin continues to expand year-over-year in Q1, maintaining its upward trend. This was driven by an improved revenue mix towards higher value offerings as we focus on opportunities that align with our strategic priorities. As a result, our AI Cloud's non-gap operating margin is now at the level of tens.

Speaker Change: <unk> more a sustainable and healthier long term growth for our company.

Speaker Change: On the profit side, you had closed non-GAAP operating margin 10, Qs to expand year over year in Q1 maintenance is a upward trend.

Speaker Change: This was driven by an improved revenue mix towards higher value offerings, as we focus on opportunities that align with our strategic priorities.

Speaker Change: As a result, our.

Speaker Change: EA Power's non-GAAP operating margin is now at the level of teams.

Dou Shen: Regarding AI chip export restrictions, as Robin just mentioned, we follow an application driven approach. Because we believe the greatest value of AI eventually lies at the application layer. even without access to the most advanced chips. Our unique full-stack AI capabilities enable us to build strong applications and deliver meaningful value. Also, our AI infrastructure is both scalable and highly efficient. enabling strong GPU utilization to support both training and inference with high cost performance. In parallel, we have the flexibility to select from a range of tip solutions based on different business scenarios, especially for inference. So looking forward, we believe that in overtime, domestically-developed, self-sufficient chips, along with increasingly efficient homegrown software, are the best.

Speaker Change: Regarding a cheap export restrictions as Robin just mentioned right. We follow an application driven approach.

Speaker Change: Because we believe the greatest value.

Speaker Change: Eventually lines at the application layer.

Speaker Change: Even without access to the most advanced chips.

Speaker Change: Our unique who stack AI capabilities.

Speaker Change: In April is to build a strong applications and deliver meaningful value.

Speaker Change: Also our AI infrastructure is both scalable.

Speaker Change: And highly efficient.

Speaker Change: Enabling strong GPU utilization to support both training and inference with high cost performance.

Speaker Change: In parallel.

Speaker Change: We have the flexibility to select from a range of chip solutions based on different business scenarios, especially for our inference.

Speaker Change: So looking forward, we believe that in the overtime domestically developed self sufficient chips, along with increasingly efficient homegrown tupperware.

Dou Shen: who jointly form a strong foundation for long-term innovation in China's AI ecosystem.

Speaker Change: We will jointly form a strong foundation for long term innovation in China's AI ecosystem.

Dou Shen: Thank you.

Speaker Change: Thank you.

Alex Yao: Your next question comes from Alex Yao with JP Morgan. Please go ahead. Thank you management for taking my question. So you accelerated the AI search transition this quarter. What's management's rationale behind the move? What are your expectations for AI answers penetration? Any updates on upcoming testing for AI monetization in 2Q? And how should we think about the ramp up into second half this year in terms of monetization and consumer behavior? Thank you. Thank you, Alex, for your question.

Speaker Change: The next question comes from Alex Yao with JP Morgan. Please go ahead.

Alex Yao: Thank you management for taking my questions sung Yu, followed you guys.

Speaker Change: So to transition this quarter.

Speaker Change: Muslims the rationale behind the move what are your expectations for AI answers penetration.

Speaker Change: Hum.

Speaker Change: Updates on upcoming testing for monetization into Q and a.

Speaker Change: How should we think about the ramp up into second half this year in terms of monitoring.

Speaker Change: Monetization in the consumer behavior.

Speaker Change: Congrats thank Alex for a question and then a question in Q1 actually we have seen a significant to the authority.

Alex Yao: And let me take your question. In Q1, actually, we have seen a significant authority over AI transformation of search, aiming to further enhance the user experiences through innovative technology. And our top priority remains the same, that is the youth experiences, as we believe that the high quality of the UEE and the continuous user metric improvements are critical for sustainable long-term growth. In April, we have seen that around 35% of the mobile search result pages contain AI-generated content, up from 32% in January, which has made our largest expansion so far. We expect this percentage to keep rising rapidly in Q1.

Speaker Change: The transformation of such.

Speaker Change: To further enhance the user experiences through innovative technology.

Speaker Change: Our top priority remains let's say that as the user experiences as we believe that the high quality of the well.

Speaker Change: Continuous user metric improvements are critical for sustainable long term growth.

Speaker Change: So we have seen that or also the 5% three five after the mobile search result pages content generated content up from 22% in January.

Speaker Change: Making our largest expansion so far we expect this percentage to keep rising interrupted city in Q2.

Alex Yao: And there are a couple of reasons behind that. In the first place, today's AI landscape is evolving very quickly. And the users' information-seeking behaviors continue to diversify. So it's more necessary than ever to make rapid innovations in such. Second, ongoing progress in the model's capabilities has also helped us to keep improving the quality, quantity, and the presentation format of the search results. while generating the multimodal contents at massive level. And meanwhile, the average cost per query will keep falling as the inference costs drop. And we can draw this out across more queries. And in the third place, we have established a solid product framework that works well with our capabilities to incorporate multimedia contents, which play a very important role in this whole process.

Speaker Change: And there are a couple of reasons of behind them in the first place today's AI landscape is evolving very quickly and their usage information seeking behaviors continue to diversify so it's more necessary than ever to make rapid innovations in such capabilities.

Speaker Change: Second ongoing progress in the more of those capabilities has also helped us to keep improving the quality and.

Speaker Change: Quantity and the presentation format outflow social results, while generating the multimodal contents massive level and Meanwhile, its the average cost per car it will keep falling us thing for its cost drops.

Speaker Change: And we can roll this out across more car race more quickly.

Speaker Change: And that's a place where you have established a solid product framework that works, where a waste our capabilities to incorporate a multi media contents waste playing a very important role.

Speaker Change: This whole process, and which can hurt us the profile are much easier to digest the ancestor aligns better.

Alex Yao: And which can help us to provide a much easier to direct answers and aligns better with the user's behavior. And we have seen very clearly signs of the improvement in the user experiences. The users who has been exposed to the AI generating such results are finding the information much more efficiently, exploring the more types of queries, and showing a stronger retention. And therefore, we are actively investing to accelerate our hair transformation.

Speaker Change: With the Joseph behavior.

Speaker Change: <unk> seen the world clearly signs of improvement.

Speaker Change: Yours experiences they use us who has been exposed to generating such results are fighting that information much more efficiently and it is.

Speaker Change: Flora in the types of cars is showing a stronger retentions and therefore, we are actively investing to a Saturday anxious formation itself search.

Alex Yao: On monetization, however, we are still very early. We are just starting to prepare for testing. Since our AI search differs significantly from the traditional search, the corresponding monetization approach needs to be rebuilt and refined. And this takes some time. That said, we can see huge potential. I have currently only a small percentage of the traditional search queries can be monetized, while the vast majority cannot. Over time, we anticipate AI search will gradually enhance our ability to monetize the long-tail queries and previously untagged areas. And we expect the queries to become monetizable as compared to the traditional search.

Speaker Change: Monetization how rescue early had just starting to prepare for testing things are as such the first significant city from a traditional such a corresponding monetization approach needs to be repaired and refine and take some time.

Speaker Change: That say, we can see huge potential currency only a small percentage of your I'll call. It traditional such car race came to monetize all the vast majority 10 notes over time, we anticipate such a brokerage fees and hence our ability to monetize the long tail queries and previously.

Speaker Change: S and waste pass car race to become.

Speaker Change: Hmm.

Speaker Change: Hi, it's about us compared to the traditional search plus AI such can likely crayola at formats that are more flexible and native and fit naturally into the U.

Alex Yao: Plus, AI Search can likely create app formats that are more flexible and native, and feed naturally into the user's experience. They can be less intrusive, but... potentially even enhance the overall experience. And looking ahead, we believe that the long-term potential of this expanding monetization capabilities is quite promising, opening up the possibilities that go beyond what traditional search can achieve.

Speaker Change: Yosef experiences.

Speaker Change: They can be less intrusive.

Actually even enhance the overall expenses and do in looking ahead, we believe that the long term potential of basic spending monetization capabilities is quite promising opening up the possibilities that cope you all watch initial such chaos.

Alex Yao: While our current move towards the AI search will inevitably put notable near-term pressures on revenue and margin, I still believe this is the right path to follow for the long term. Thank you, Alex.

Speaker Change: Well, our clear move to Wassa as such well inevitably pool notable near term pressures on revenue and margin are we still believe it's the right path to follow for a long time gross thank you Alex.

Gary Yu: The next question comes from Gary Yu with Morgan Stanley. Please go ahead. Hi, thank you, management. I have a question regarding RoboTaxi.

The next question comes from Gary Yu with Morgan Stanley. Please go ahead.

Speaker Change: Hi, Thank you management I have a question regarding robo taxi given the recent development in the Robo taxi space.

Gary Yu: Given the recent development in the RoboTaxi space, including some of the players announcing their new RoboTaxi vehicles and partnership with Uber, how do you feel the evolving competitive landscape, and what differentiates Baidu RT6 from other RoboTaxi vehicles? Also, are you exploring similar types of partnerships like your peers, and should we expect faster expansion of Apollo Gold this year? And lastly, what scale and unique economics are you targeting, and how to think about the long-term profitability potential? Thank you. Gary, we've been invested in autonomous driving for over 12 years. Today Apollo's goal is among the first and the very few players globally to operate advanced right healing services at scale.

Speaker Change: Including some of the players announcing their new Oh robo taxi vehicles in partnership with Uber.

Speaker Change: How do you view, the evolving competitive landscape and what differentiates up by two six from other robo taxi vehicles.

Speaker Change: Also are you exploring similar type of partnership like your peers shall we expect class by expansion of our polo go this year.

Speaker Change: And lastly, what scale engineer economics that you're targeting and how to think about the long term profitability potential. Thank you.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Gary.

Speaker Change: We'll be investing at home striving for over 12 years.

Paulo: Today I Am Paulo goal is among the first and the very few players globally to operate at homes ride hailing services at scale.

Gary Yu: making us both China's largest and a global leader in this space.

Paulo: Making us both China's largest and global leader in the space.

Gary Yu: RT-6 is the world's first and, as of today, the only purpose-built, mass-produced Level 4 autonomous vehicle. It is designed from the ground up for fully driverless operation. with self-developed hardware design, algorithms, and software and featuring top safety redundancy. RG6 is now running at meaningful scale across multiple cities and its unit cost is below US$30,000. are far better than anyone else on the planet. With this unique strength and proven bench model, Apollo Go has been making steady progress in global expansion. most recently entering Dubai and Abu Dhabi. Altogether, our global footprint covers 15 cities, as I mentioned during the prepared remarks.

Paulo: Hockey stick, that's the worst first and as of today. The only purpose skewed mass produced at level four autonomous vehicle.

Paulo: It is designed from the ground up for fully driverless operation.

Paulo: With Ah self developed the hardware design.

Paulo: Operations and software and a fee.

Paulo: Featuring top safety redundancy.

Are these six is now running at meaningful scale across multiple cities.

Paulo: Its unit cost are below 30000 U S dollars.

Paulo: Far better than anyone else on the planet.

Paulo: With this unique strength.

Paulo: And proven business model a portal go has been making steady progress in global expansion.

Paulo: Most recently entering in Dubai and Abu Dhabi.

Paulo: Altogether, our global footprint covers 15 cities as I mentioned during the prepared remarks.

Gary Yu: And on expansion strategy, we are highly open and adaptive. We're ready to enter into any city worldwide. As long as regulations and conditions allow, we can enter quickly and scale efficiently. Our confidence comes from our, you know, long operating history. low-cost structure and excellent safety record.

Speaker Change: And expansion strategy, we are highly open and attacked pit.

Speaker Change: We're ready to enter into any city worldwide.

Speaker Change: And so long as regulations and conditions allow.

Speaker Change: We can and are quickly and scale efficiently.

Speaker Change: Yeah.

Speaker Change: Our confidence comes from our.

Speaker Change: You know long operating history.

Speaker Change: Low cost structure and our excellent safety record.

Gary Yu: With over 1,000 fully driverless vehicles deployed, we are expecting to see faster growth in our global fleet size. geographic range, and wide volumes this year and beyond. Meanwhile, we are proactively exploring new business models through partnerships, especially those that can scale fast and then quickly. We're in active discussions with various players, including Rai Healing Platform. fleet operators, and more. While serious partnerships usually take time to work through all the details. Some of them are already taking shape. We are happy to share progress that is... really meaningful and concrete.

Speaker Change: With over 1000 fully driverless vehicles deployed we are expecting to see faster growth in our global fleet size.

Speaker Change: Our geographic reach and wide volumes this year and beyond.

Speaker Change: Yeah.

Speaker Change: Meanwhile, we are proactively exploring new business models to school partnerships, especially those.

Speaker Change: That can scale fast and learn quickly.

Speaker Change: We're in active discussions with various players including ride hailing platforms.

Speaker Change: Operator.

Speaker Change: More.

Speaker Change: Well Cirrus partnerships.

They take time to work through all the detail some of them are already taking shape.

Speaker Change: We are happy to share progress that is.

Speaker Change: Really meaningful and concrete.

Gary Yu: Our strategic partnership with Car Inc., our top auto rental, China's top auto rental service provider, is one example. And I'm sure there's more to come.

Speaker Change: Our strategic partnership with car, Inc. A syndrome, so too are our top auto rental China's top auto rental or service provider as.

Speaker Change: As one example.

Speaker Change: Uh huh.

Speaker Change: I'm sure there's more to come.

Gary Yu: Looking into the longer term. We see a clear path to profitability as hardware and labor costs keep coming down and our growing operational scale brings more efficiency. given our leading position in both technology and operations. We are confident Apollo Goal will continue to lead the future. We expect Apollo Gold to be a key driver of Baidu's long-term growth.

Speaker Change: Looking into the longer term.

Speaker Change: We see a clear path to profitability as hardware and labor costs keep coming down and our growing operational scale brings more efficiencies.

Speaker Change: Given our leading position in both technology and our operations.

Speaker Change: We are confident our polo golf will continue to lead the food.

Speaker Change: We expect our polo go to be.

Speaker Change: A key driver of Baidu.

Long term growth.

Miranda Zong: Thank you. Your next question comes from Miranda Zong with Bank of America Securities. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Miranda Zhang with Bank of America Securities. Please go ahead.

Miranda Zong: Thank you for taking my questions, and congrats on the good results. My question is about the competition. So we see other AI applications are ramping users with enhanced models and offer more advanced functionalities like deep search or agent, and some are leveraging existing large traffic super app platforms. So to this, how will Baidu compete with other AI applications and platforms? Thank you. Thank you for your question.

Miranda Zhang: Thank you for taking my questions and congrats on the good result.

Speaker Change: My question is about the competition.

Miranda Zhang: So we see other.

Miranda Zhang: Applications are ramping new series with enhance models.

Miranda Zhang: Oh for more advanced functionality.

Miranda Zhang: Search or agents and some leveraging our existing large traffic platforms.

Miranda Zhang: Due to these all will baidu compete with other applications and platforms. Thank you.

Miranda Zhang: Thank you for your question visits curious as I mentioned earlier our waste.

Julius Rong Luo: This is Julius. As I mentioned earlier, with the AI evolving very quickly, people now have different ways and choices to find information and enjoy the contents. So we understood early on that if we didn't take bold steps to renovate the search, we would be challenged sooner or later. That's why we were among the first major tech companies in China or globally to use AI to transform a legacy quality. In recent months, you have seen us accelerate these transformations. And as for AI travels specifically, for sure, they are one innovative form of AI. And we also have our own chatbot products, like EarningBots.

Miranda Zhang: We were quick to people and they'll have different ways and choices to find information and enjoying the contents. So we're too early on that if we didn't have bold steps to renovate as such we will be challenged sooner or later, that's why we were among the first major tech companies in China or globally.

Miranda Zhang: To use AI to transform a legacy core business.

In recent months as you have seen us a salary of these transformations and asphalt are troubled specifically.

Miranda Zhang: For sure that they all want innovative fall off the applications and we also have our own chat ball part of earning calls and we have also integrated our conversational AI capabilities in the Baidu App. So I would say the air travelers represent what's important exploration software applications about there and all of the ultimate form.

Julius Rong Luo: And we have also integrated conversational AI capabilities in the Baidu app. So I would say that AI chatbots represent one important exploration of applications. But they are now the ultimate form. Our goal is to find the most powerful AI applications that can create lasting values in this AI era. So when we talk about a competition, it's not just about competing with the track boss. I think it's about rethinking the value of search in AI. From there, we have identified two directions we are currently focused on. First, we believe that AI search should efficiently meet user needs while offering highly engaging experiences.

Miranda Zhang: Our of course to find the most powerful applications that can create lasting value.

Miranda Zhang: Yogurts. So when we talk about our competition is not just a ball competing waste travels I think it's a ball a rethinking of the value of such times.

Miranda Zhang: From there we have identified two directions. We are currently focused on.

Miranda Zhang: First we believe that as such so efficiency.

Miranda Zhang: So we're offering a highly engaging experiences.

Julius Rong Luo: Our AI search now looks very different from the traditional search. We prioritize the rich, impressive, multi-model content that is easier to understand and more nature to interact with. Second, we are reimagining the AI search to go beyond just fighting. And our ambition is to expand the search to help users make decisions, provide solutions, and ultimately deliver results. To support this, I think a key strategy initiative for us is to make Baidu more capable through innovative approaches like agents. Our agents today can already handle the users, handle the complexity. complicated problems, support the decision-making, and connect them with the right solutions be highlighted.

Miranda Zhang: As such now look very different from the tangibles, such how we prioritize the rich are impressive multi module content that is easier to understand and nature to into rubbers.

Miranda Zhang: Second we are re imaging as such to cope you all just fighting information.

Miranda Zhang: Our ambitions to expand onto.

Miranda Zhang: To help users make decisions provide solutions and ultimately deliver yourselves.

Miranda Zhang: Choose support was I think the.

Miranda Zhang: A key strategic initiative for us is to make baidu more capable sewer innovative approaches like agents or agents today can already heavily users handle a complete is complicated.

Miranda Zhang: Complicated Providence support decision, making and connect them with the right behind it.

Julius Rong Luo: Looking ahead, we aim to further enhance our services. capabilities. This will not only improve the user experiences by meeting more needs, but also help our customers and our partners connect much better with users than before. Besides, we are also making Baidu more open. This quarter, we proactively embraced MCP and third-party APIs. On one hand, by connecting the third-party tools and capabilities, we are enabling the users and customers and the partners to do even more things within our platform. And on the other hand, we are also trying to open up our capabilities through MCP. For example, our e-commerce MCP.

Miranda Zhang: Looking ahead to where and to further enhance our services capabilities through agents.

Miranda Zhang: This will not only improving the user experiences by meeting needs, but also however customers and our partners connect much better with your system before.

Miranda Zhang: Besides we're also making the baidu more open this quarter, we proactively embrace M. C. P N as a part of agents on lung hangs by connecting the third party tools and capabilities, we are enabling them to use this and customers and the partners to even more to do.

Miranda Zhang: Things with.

Miranda Zhang: Platform and on the <unk>.

Miranda Zhang: Allison as we're also.

Miranda Zhang: To open up our capabilities sooner MCP.

Miranda Zhang: For example, our e-commerce MCP by treating social way of happening all parties in the ecosystem to benefit from the greater flexibilities and unlock the broader opportunities both within and beyond the platform.

Julius Rong Luo: By doing so, we are helping all parties in the ecosystem. to benefit from the greater flexibilities and unlock the broader opportunities, both within and beyond our platform. And in the face of today's increasingly dynamic market, and we believe our innovative approaches can expand both the depth and the breadth of what such can do, and ultimately create the values for everyone in the ecosystem. Thank you.

Miranda Zhang: And in the face of todays increasingly it them into the market and we believe our innovative approaches can expand both the depth and the breadth of such can do and ultimately a cradle of values for everyone in the ecosystem. Thank you.

Wei Dong: Your next question comes from Wei Dong with UBS. Please go ahead. Hi, good evening, management. Thank you for taking my question. I want to follow up on the cloud side. So with accelerating enterprise AI adoption, how should we think about the enlarged TAM for China's cloud market? And how is our cloud business differentiated from competitors in terms of strategy, technology, and customer base? Also regarding the Tianfan platform, could you please maybe share more some updates here? Which industries are seeing the fastest AI adoption? And where do we see the largest long-term potential? Thank you. Thank you for the question.

Speaker Change: And in Eastern Canada.

Speaker Change: With UBS. Please go ahead.

Speaker Change: Hi, Good evening management. Thank you for taking my question I wanted to follow up on the cloud side, so with accelerating enterprise AI adoption, how should we think about the enlarged Tam for China's called market and how is our cloud business differentiated from competitors in terms of strategy.

Our technology and customer base and also regarding the churn from platform could you. Please maybe chamois some updates here, which industries are seeing the fastest AI adoption and where do we see the largest long term potential. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you for the question I'll take it.

Dou Shen: I'll take it.

Dou Shen: As AI adoption accelerates, the time for China's cloud market is expanding meaningfully, driven by changes across the stack. With foundation models driving up the need for massive computing power, the ability to build and manage large-scale GPU clusters and to utilize GPUs effectively has become a key competitive advantage. Meanwhile, as models evolve with different strengths and AI applications bring increasingly diverse needs, The cloud platforms with broad model portfolios and full-stack capabilities are best positioned to offer the flexibility and scalability customers require. This industry shifts the line perfectly with Baidu's positioning, making our unique AI capabilities increasingly valuable.

Speaker Change: This AI adoption accelerates the time for China's cloud market is.

Speaker Change: Is expanding meaningfully.

Speaker Change: Driven by changes across the stake.

With foundation model is driving the need for a massive computing power the ability is to build and manage large scale GPU clusters and to utilize gpus effectively.

Speaker Change: Become key competitive advantages.

Speaker Change: Meanwhile, as models evolve with different Jones's in AI application screen increasingly diverse needs.

The cloud platforms with broader model portfolios and <unk> capabilities, we're best positioned to offer the flexibility and scale up the ability customers require.

Speaker Change: These industry shifts aligned perfectly with baidu position, making our unique AI capabilities increasingly valuable.

Dou Shen: Baidu is one of the very few cloud providers globally with end-to-end full-stack AI capabilities. So we offer China's most efficient AI cloud infrastructure, backed by strong DPO cluster management. This allows us to deliver high-performance, stable, and cost-effective AI services. while continually improving training and inference efficiency.

Speaker Change: You know Baidu is.

Speaker Change: One of the very few cloud providers globally with end to end full stack AI capabilities.

Speaker Change: So we offer China's most efficient AI cloud infrastructure beckoned by strong GPO cluster management.

Speaker Change: This allows us to deliver high performance stable and cost effective AI services.

Speaker Change: Continually improving training and inference efficiency.

Dou Shen: Qianfan in our mesh platform is among the most advanced on the market. It offers a comprehensive model library, covering both our early series and nearly all mainstream third-party and open-source models. This quarter, Sui further enhanced Tianfan's 2Chain with extended support for training, fine-tuning, and distillation, especially for newly added multimodal and reasoning models. Strategically, we remain firmly committed to an application-driven approach. So as the AI landscape evolves, this approach positions us well to deliver differentiated value. We offer full-stack end-to-end AI products and solutions tailored to the needs of specific industries and scenarios. I bring AI into every aspect of their operations.

Speaker Change: She has been you know our mask platform is among the most advanced on the market.

Speaker Change: It offers a comprehensive model labor be covering both our or any serious.

Speaker Change: And in nearly all Ministry of CIT Party and open source models.

Speaker Change: This quarter. So we further enhanced 10 funds to chin with expanded support for training fine tuning and distillation, especially for our newly added multimodal and reasoning models.

Speaker Change: Strategically we remain firmly committed to an application driven approach.

Speaker Change: So this is AI landscape evolves this approach positions us well to deliver differentiated value.

Speaker Change: We offer a full stack into end products and solutions tailored to the needs specific industries and scenarios.

Speaker Change: I bring a AI into every aspect of their operations.

Dou Shen: So we help enterprises improve efficiency, reduce cost, and eventually transform their entire workflows. With these gems, we have captured the opportunity presented by industry shift and repositioned ourselves. as China's top tier cloud provider in the EIUF. The increasing market recognition of our AI expertise continues to drive strong momentum in our climate pipeline. as we build and deepen partnerships with leading enterprises. And we are also increasingly becoming the preferred choice for mid-tier businesses. As for enterprise adoption, we are seeing rising interest across sectors. Early movers like Internet, tech, and online education companies are adopting AI quickly.

Speaker Change: So we help enterprises improve efficiency reduce costs and <unk>.

Speaker Change: Eventually transform their entire workflows.

Speaker Change: With this juice, we have captured the opportunity presented by industry shift and reposition ourselves.

Speaker Change: Is China's top tier cloud provider.

Speaker Change: AUM.

Speaker Change: The increasing market recognition of our expertise continues to drive strong momentum in our claimed pipeline.

Speaker Change: As we build and to deepen partnerships with leading enterprises.

Speaker Change: And we are also increasingly becoming the preferred choice for one mid tier businesses.

Speaker Change: As for our enterprise adoption, so we were seeing rising interest across sectors.

Speaker Change: Early movers like inter night Tike in online education companies or adopting AI quickly.

Dou Shen: well, others, such as automotive. financial services, utilities, and the public sector are also actively exploring with openness. So as technology advances and costs decline, we are ready to lead the next wave of enterprise AI adoption and translate innovation into real-world value.

Speaker Change: Well, others such as automotive.

Speaker Change: Financial services utilities, and the public sector are also actively exploring with openness.

Speaker Change: As technology advances and costs to clean we're ready to lead the next wave.

Speaker Change: Enterprise adoption and translate innovation into reward value.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Thomas Chong with Jefferies. Please go ahead.

Thomas Chong: The next question comes from Thomas Chong with Jeffreys, please go ahead. Hi, good evening. Thanks, management, for taking my questions.

Thomas Chong: Hi, Good evening management.

Thomas Chong: My questions are can management elaborate about the overall capital allocation plan.

Jackson Junjiehe: Can management elaborate about the overall capital allocation trends and the key priorities for 2025? Thank you.

Thomas Chong: The key priorities all attention bye. Thank you.

Jackson Junjiehe: Hi Thomas, this is Jackson, I will take your call. So we are firmly committed to our investments in AI. So as we believe, this will generate meaningful returns over the long term. So when quantifying such investments, please note our AI investments are reflected not only in capex, but also in operating cash flow, outflow. So we're taking these two together. So our total AI investments in 2024 significantly increased from 2023. So reflecting our conviction in the future growth potential. In 2025, we plan to continue to increase our AI investment to further solidify our AI foundation and prepare for future growth.

Thomas Chong: Hi, Thomas This is Jackson I will take your call.

Speaker Change: We are firmly committed to our investments in AI.

Speaker Change: So as we believe this will generate meaningful returns over the long term so when quantifying specialty investments. Please note.

Speaker Change: And.

Speaker Change: The affected not only capex, but also the operating cash flow outflow.

Speaker Change: We're taking these two together so our total <unk>.

Speaker Change: <unk> 2024 significantly increase from 'twenty to 'twenty three.

Speaker Change: Our conviction is a huge future growth potentials.

Speaker Change: The <unk> hundred five we plan to continue to increase our investment to further solidify our foundation and prepare for future growth.

Jackson Junjiehe: So let me walk through the key areas that we are now focusing on. So first, in AI cloud business. We are investing in AI Infra to meet rising market demand driven by accelerating AI adoption. So this is prompting us to quickly scale up our AI Infra to capture emerging opportunities. As you've seen, our AI cloud revenue grew 42% year-over-year this quarter, with non-gap operating margin in the teens.

Speaker Change: Walk through the key areas that we are now focusing on the first AI cloud.

Speaker Change: We are <unk> to meet the rising market demand driven by accelerating adoption. So.

Speaker Change: I'm being asked to quickly scale up.

Speaker Change: To capture emerging opportunities.

Speaker Change: You've seen our <unk> revenue grew 42% year over year this quarter with non-GAAP operating margin in the teens.

Jackson Junjiehe: Secondly, we continue to invest in advancing our earning model. Ongoing technical progress has enabled us to train better models more efficiently and at a lower cost. As a result, we brought a series of high-quality earning models to market in quick succession.

Speaker Change: Secondly, we continue to invest in advancing our own models.

Speaker Change: Ongoing technical program has enabled us to achieve better models more efficiently and at lower costs. As a result, we brought a series of a high quality of any models to match in quick succession.

Jackson Junjiehe: Also, we are investing in autonomous driving technology. Last quarter, Apollo Go validated its base model in its large operational area in China. This milestone has motivated us to move faster in expansion, including entering the Middle East market, while riding volume continues to accelerate across our existing operations. We will continue this momentum going forward.

Speaker Change: Also we are in your messaging autonomous driving technology last quarter up local about it. It is this model, it's largely operational error rate in China.

Speaker Change: This milestone has motivated us to move faster in expansion, including entry into the middle East market, while letting volume will continue to accelerate across our existing operations.

Speaker Change: We will continue with this momentum going forward.

Jackson Junjiehe: Lastly, we continue to invest in AI for transformation with a focus on user experience. Well, as Julia said, when we step up this investment, while monetization for AI search results remains at an early stage, we do expect some margin and pressure in the near term, but we see this as a necessary step to unlock long-term growth.

Speaker Change: Lastly, we continue to invest in the transformation with a focus on user experience.

Speaker Change: Well actually is that we when we set up this investment while monetization for yeah, especially as always remains at the early stage, we do expect some margin pressure in the near term but.

Speaker Change: But we see this as a necessary step to unlock long term growth.

Jackson Junjiehe: Another key focus of our capital allocation is shareholder returns. As I said earlier, since last year, we have significantly accelerated our share repurchase program. We further repurchased 445 million U.S. dollars from the beginning of Q1 this year. These are our strongest repurchase efforts in the past three years. We expect to keep a similar pace this year, reflecting our long-standing commitment to shareholders and our confidence in our long-term growth. Thank you.

Speaker Change: Another key focus our capital allocation and shareholder returns.

Speaker Change: As I said earlier, we have significantly accelerated our shell.

Speaker Change: Program, we repurchased 445 million you have to order from the beginning of Q1. This year, we used our junket they purchase for Atlas in the past three years, we expect will keep a similar pace. This year, we are tracking our longstanding commitment to shareholders and our confidence in our long term growth.

Speaker Change: Thank you.

Operator: Ladies and gentlemen, that does conclude our conference for today. Thank you for watching!

Speaker Change: Ladies and gentlemen that does conclude our conference for today. Thank you for participating you may now all disconnect.

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