Q3 2025 Baidu Inc Earnings Call

Speaker #1: 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.

Speaker #1: I would now like to turn the meeting over to your host for today's conference, Yanhong Li, Baidu's Director of Investor Relations.

Speaker #2: Hello, everyone. Welcome to Baidu's third 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.

Speaker #2: On the call today, we have Robin Li, our co-founder and CEO; Julius Rongluo, our EVP in charge of Baidu Mobile Ecosystem Group (MEG); Dou Shen, our EVP in charge of Baidu AI Cloud Group (ACG); and Henry Haijian He, our CFO.

Speaker #2: 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.

Speaker #2: Credit Security Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.

Speaker #2: For detailed discussions of these risks and uncertainties, please refer to our latest annual report and our filings with the SEC and Hong Kong Stock Exchange.

Speaker #2: Baidu does not undertake any obligation to update any forward-looking statements, except as required and applicable. Our earnings press release and this call include discussions of certain analytics and GAAP financial measures.

Speaker #2: Our press release contains a reconsideration of the analytics and gap measures to the analytics directly comparable gap measures, and it's available on our IR website at ir.baidu.com.

Speaker #2: The conference is being recorded. As a reminder, the webcast of this conference call will be available on Baidu's IR website. I will now turn the call over to our CEO, Robin.

Speaker #3: Hello, everyone. In Q3, Baidu Core reported total revenue of RMB 24.7 billion. AI Cloud revenue reached RMB 6.2 billion, increasing 21% year over year, solid growth momentum.

Speaker #3: Apollo Go's growth accelerated sharply. We delivered over 3,000 fully driverless operational rides in Q3, representing 212% year-over-year growth, up from 148% last quarter.

Speaker #3: This quarter demonstrated how AI is driving transformative value across our business. From enterprise services to consumer-facing products to smart mobility, our AI capabilities are delivering proven, tangible impacts at scale.

Speaker #3: Starting with the enterprise side, where our AI Cloud business continues to scale with healthy momentum and deliver measurable business impact. In Q3, AI Cloud continued its strong growth trajectory. Within AI Cloud, the areas most central to AI achieved the fastest growth.

Speaker #3: In particular, subscription-based revenue from AI accelerator infrastructure surged 128% year over year, becoming the primary driver of AI Cloud's expansion. This reflects both a healthy shift toward a more recurring, structurally healthier revenue model and a strong demand for our AI products and solutions.

Speaker #3: Our ability to serve this growing demand stems from our early and strategic deployment across Baidu's full stack and AI architecture, spanning infrastructure, framework, models, and applications.

Speaker #3: Which allows us to support enterprises at every stage of their AI journey. At the infrastructure layer, our AI infrastructure is among the most advanced in China, powered by a diverse mix of domestic and international high-performance computing resources.

Speaker #3: Including our own self-developed AI computing architecture. Through continuous technical innovation, we drive performance and efficiency improvements while consistently reducing inference costs. Additionally, our industry-leading resource management capabilities significantly boost utilization and scalability.

Speaker #3: These advantages make our AI infrastructure reliable, scalable, and highly cost-effective for enterprise clients. At the model layer, we feature our self-developed early foundation model, which continues to iterate rapidly.

Speaker #3: At the recent Baidu World 2025, we unveiled early 5.0, our first native Omni model foundation model, with exceptional performance in Omni model understanding, creative writing, and instruction following.

Speaker #3: Early not only represents the cutting edge of our AI technology, but also serves as a backbone behind much of the AI-driven innovations across our businesses.

Speaker #3: At the application layer, we have a range of AI applications tailored to enterprise business needs. Let me share some examples. The first is FAMO, or FM Agent, a self-evolving agent we recently launched that significantly improves enterprise efficiency, built on learning.

Speaker #3: It autonomously explores countless possibilities and continuously evolves its strategies to identify the best solutions for highly complex, constantly changing real-world problems. The FM agent is now deployed across industries, including transportation, energy, logistics, and ports.

Speaker #3: Optimizing complex operations that traditional approaches struggle to handle. Its capability is particularly valuable in China, where we have diverse industrial sectors with numerous scenarios demanding efficiency improvements.

Speaker #3: When you can meaningfully boost efficiency across such varied use cases, the social impact is profound. Another example is the Daniel Wu English Coach, an early powered digital employee we created for Yashan Education.

Speaker #3: Featuring the likeness of the well-known actor, it enables users to engage in one-on-one real-time English conversation practice anytime, anywhere. This directly addresses a key challenge: Yash's users require frequent, on-demand speaking practice, which is difficult to scale with human instructors.

Speaker #3: The digital employee provides unlimited availability and an immersive, engaging learning experience. Besides enterprises, our AI applications are creating value for individuals by enhancing productivity.

Speaker #3: Baidu Wanku and Baidu Drive are the largest AI applications for individuals. They have been revitalized with AI. Their combined MAU has approached 300 million. In August, Wanku and Drive jointly launched a general-purpose AI agent platform that orchestrates hundreds of specialized agents to complete complex end-to-end tasks through simple natural language interactions.

Speaker #3: The platform has gained strong traction since launch, demonstrating how AI can meaningfully enhance personal productivity at scale. In the physical world, autonomous driving exemplifies the transformative value of AI, unlocking new possibilities for mobility, safety, and efficiency.

Speaker #3: In Q3, Apollo Go's growth significantly accelerated to new heights. During the quarter, we provided over 300,000 fully driverless operational rides to the public, representing a remarkable 212% year-over-year surge compared to 148% growth last quarter.

Speaker #3: In October, the weekly average for fully driverless operational rides exceeded 250,000, marking one of the highest levels achieved in real-world robotaxi operations globally. To date, our fleets have accumulated over 240 million autonomous kilometers, with more than 140 million of those being fully driverless.

Speaker #3: Maintaining an outstanding safety record throughout, achieving this rapid expansion while delivering exceptional safety performance is a powerful validation of our technology's maturity and operational capabilities.

Speaker #3: We are proud to see our decade-long commitment to autonomous driving now bearing fruit in large-scale operations. Reaching this scale requires maturity across multiple fronts, advanced technology, and a rigorous and widely recognized safety record.

Speaker #3: Demonstrated business viability, deep operational expertise, and the ability to expand rapidly. These years of unwavering investment have not only given us a first-mover advantage, but more importantly, have built the comprehensive capabilities that position Apollo Go as the undisputed global leader in this field.

Speaker #3: With these strengths, Apollo Go has now entered a phase of rapid global expansion. As of October, Apollo Go's global footprint expanded to 22 cities, increasing from 16 last quarter.

Speaker #3: In October, Apollo Go entered Switzerland through a strategic partnership with Postbus, the country's leading public transport operator. Together, we plan to launch autonomous ride-hailing services in eastern Switzerland.

Speaker #3: Representing a key step in our European market expansion and another milestone in our global journey. In the Middle East, we secured one of the first fully driverless commercial operation permits in Abu Dhabi recently and deepened our collaboration with local partners.

Speaker #3: In Dubai, Apollo Go was granted exclusive authorization to conduct self-driving trials on open roads at the fourth Dubai World Congress for Self-Driving Transport in September.

Speaker #3: RT6 provided trial rides to global attendees, including government officials and business investors, showcasing our leaders, media, and technology's maturity on an international stage and demonstrating our global leadership.

Speaker #3: In Hong Kong, where Apollo Go has established by far the strongest presence in right-hand drive robotaxi markets, we expanded our open road testing zones to include Kowloon and Kwun Tong districts recently, further strengthening our position in this strategically important market.

Speaker #3: These milestones spanning Europe, the Middle East, and Asia validate both our technology's adaptability and our ability to partner effectively with leading local operators in different regulatory environments.

Speaker #3: Looking ahead, we will expand to more markets with strong commercial potential and partnership opportunities. We will maintain our unwavering focus on safety and operational excellence as we work toward making smart mobility widely accessible.

Speaker #3: In our mobile ecosystem, agents and digital humans represent AI-native monetization innovations that are transforming our online marketing business, creating substantial value for advertisers through higher engagement, better lead conversion, and stronger ROI.

Speaker #3: Our agents help advertisers effectively clarify user intent through intelligent multi-round conversations, and quickly find the most relevant, high-quality sales leads. This ensures advertisers receive more precise and qualified leads compared to traditional approaches.

Speaker #3: Building on this capability, agents have evolved into multiple forms: text-based, voice-enabled, and visually embodied digital humans. Each is designed to address different scenarios and interaction needs.

Speaker #3: Such versatility enables advertisers to choose the most effective format for their specific use cases, achieving broader scenario coverage and higher conversion efficiency. As a result, agents have gained strong traction across diverse industries, including healthcare, business services, and lifestyle services.

Speaker #3: In September, around 33,000 advertisers generated ad spending through our agents on a daily basis. Digital humans also saw strong momentum. Powered by Ernie, our digital humans provide 24/7 AI-powered live streaming for advertisers at low costs.

Speaker #3: Making professional live streaming accessible across more scenarios and industries. The technology continues evolving, delivering greater realism, more natural interaction, and real-time engagement with viewers.

Speaker #3: This enables performance that surpasses human hosts in many cases. Making our digital humans increasingly attractive to advertisers, adoption has broadened beyond merchants to sectors such as healthcare, automotive, and legal services.

Speaker #3: We are seeing both existing clients increase their budgets and new clients rapidly coming on board. In September, the number of digital humans live streaming on our platform almost tripled year over year, underscoring quick adoption across industries and growing monetization potential.

Speaker #3: These innovations are already generating significant revenue with fast growth rates. In Q3, combined revenue from agents and digital humans reached RMB 2.8 billion, up 262% year over year, validating the strong market appetite for our AI-native monetization approaches.

Speaker #3: Looking ahead, we see substantial opportunities to scale these innovations further, broadening adoption across more verticals and deepening penetration with existing advertisers. Now, let me review the key highlights for each business.

Speaker #3: In our AI cloud business, our client portfolio continued to improve in Q3, demonstrating deeper collaboration across the board. Leading enterprise clients increased spending and expanded usage beyond AI infrastructure.

Speaker #3: Mid-tier enterprise clients delivered healthy growth, with both subscription-based revenue and client count rising. Several key verticals saw strong momentum. In embodied AI, our client base expanded to 35 from 20 last quarter, covering nearly all major industry players in China.

Speaker #3: The automotive vertical also delivered strong growth, with revenue nearly doubling year over year. In addition, this quarter, we entered into new collaborations with leading players, including Neolix, a major provider of autonomous delivery vehicles in China.

Speaker #3: Collectively, these results affirm the broadening adoption and strong recognition of Baidu AI Cloud. To address fast-growing demand, we strategically upgraded our MOS platform, Tianfan, to be agent-centric.

Speaker #3: Tianfan is now positioned to provide not only leading model services with a constantly enriched model library, but also cutting-edge agent development capabilities and best-in-class agent infrastructure.

Speaker #3: By integrating high-quality proprietary and third-party capabilities and tools, Tianfan enables seamless agent creation and empowers enterprises to accelerate AI-native application development. At the application level, we are driving productivity gains both internally and externally.

Speaker #1: In September, AI contributed to over 50% of new code generation under developer improvement, substantially enhancing our overall oversight and R&D engineering productivity.

Speaker #1: We exemplify our belief that AI should liberate humans from repetitive tasks, providing immediate efficiency gains. Externally, we are democratizing our no-code AI through.

Speaker #1: After continuous capability enhancements, we launched Midas Version International, named Midou November, in bringing code to more powerful global users. By removing barriers, we aim for training.

Speaker #1: To empower more people worldwide to innovate and create with AI, Intelligent Driving Apollo provided 3.1 million fully driverless operational rides in Q3, up 212% year over year.

Speaker #1: As of November 2025, cumulative rides provided to the public have surpassed 17 million. In terms of geographic expansion, Apollo Gold added six new cities, bringing its global footprint to 22 cities.

Speaker #1: As of October 2025 . In Chinese mainland , Apollo Gold has already achieved 100% fully driverless operations in multiple cities , including Beijing , Shanghai , Shenzhen , Chengdu , Chongqing , Wuhan , Haikou , Sanya and more .

Speaker #1: These are not pilot zones, but represent real services already open to the public, which speaks to the maturity of our technology operation on our asset model, light and domestic, as well as partnerships.

Speaker #1: We made good progress this quarter. The asset-light approach allows us to expand our autonomous driving services through partnerships and facilitates faster and more capital-efficient expansion.

Speaker #1: Following the launch of fully autonomous vehicle rental services with car Inc. , Apollo Gold now enables Cross city travel in Hainan Province with fully driverless rental vehicles , offering users a differentiated experience not typically available through traditional car rental services , particularly for tourism and leisure travel .

Speaker #1: In addition to our partnership with Ride , we achieved scaled fully driverless operations in two cities in . China Further validating the feasibility of asset light the model Looking ahead , .

Speaker #1: We will continue to expand while rapidly prioritizing safety, accelerating the adoption of autonomous ride-hailing services across broader markets in our mobile ecosystem.

Speaker #1: The AI transformation of Baidu Search continues to progress in Q3. At the end of October, roughly search result pages contain AI content.

Speaker #1: We believe this represents an optimal and sustainable level. This quarter, we prioritized enhancing the quality of multimodal content search within AI results.

Speaker #1: While expanding our overall content ecosystem, AI-generated multimodal content saw rapid growth in both volume and quality, particularly with daily AI video generation at scale.

Speaker #1: While expanding our overall content ecosystem . AI generated multimodal content saw rapid growth in both volume and quality in particular with daily AI video generation the scale consistently at millions Our AI GC of content continues to expand total quickly , while distribution Baidu App is also within seeing growth as supply content improves , users experience richer , more relevant and engaging search .

Speaker #1: User results continue to improve metrics . In September , apps Baidu MoU reached 708 million , up year 1% year over . The average time spent per user in Q3 increased 2.3% year over year .

Speaker #1: We are also extending our AI search capabilities to external partners through the Baidu AI Search API, which enables our integration of industry-leading search technology that delivers superior accuracy, authority, and comprehensiveness.

Speaker #1: Leading companies such as Samsung , Xiaomi and Honor have already adopted the API . This strategic initiative expands our technology reach beyond our own ecosystem business , unlocking new models and creating broader value across the industry , underpinned by our full stack AI capabilities .

Speaker #1: Each business group within Baidu has seen rapid progress with product both innovation and business growth . From an AI native perspective , our portfolio cuts across business with a groups comprehensive range of AI powered businesses from AI , cloud , infra to AI applications such as Baidu and Baidu Drive , and to AI native marketing services including agents and digital humans .

Speaker #1: All of which are showing strong growth momentum in the physical world . Apollo Gold , our largest AI application to , continues scale rapidly , and these are just a few examples underscoring the based broad growth of our AI powered businesses and the meaningful business impact our AI capabilities are already delivering at scale .

Speaker #1: Looking ahead, we will continue to expand our AI-powered revenue streams and strengthen our position to capture the long-term opportunities ahead.

Speaker #1: We are confident that our AI capabilities will bring even greater transformative value across our portfolio in the years to come. With that, let me turn the call over to Henry to go through the financial results.

Speaker #2: Thank you . Robin and hello everyone . Robin just mentioned our AI powered businesses , and I'd like to elaborate . Based on ongoing feedback from investors and to better reflect valuation , based on our current portfolio , drivers we are introducing a new AI native view this Quarter quarter . .

Speaker #2: Thank you . Robin and hello everyone . Robin just mentioned our AI powered businesses , and I'd like to elaborate . Based on ongoing feedback from investors and to better reflect valuation , based on our current portfolio , drivers we are introducing a new AI native view this Quarter quarter .

Speaker #2: groups to Business track AI empowered assets companywide view . new This organizes our business the nature of according to products and services , helping investors better understand the fundamental valuation drivers across our diverse product and service offerings .

Speaker #2: Going forward, we will provide business updates through this AI-native view on an ongoing basis. While results disclose under the existing reporting methods, we aim to give investors complementary lenses to assess the value of our portfolio from this AI view.

Speaker #2: We have a rich array of AI empowered assets . We are highlighting three categories this quarter AI , infra , AI cloud , applications , and AI native marketing services .

Speaker #2: First , AI cloud , infra , which refers to the AI and platform infrastructure services . We provide to enterprises and public sector in Q3 AI , cloud from revenue , infra reached RMB 4.2 billion , 33% year up over year .

Speaker #2: We operate one of China's most advanced AI accelerator infrastructure , enabling highly efficient and cost effective training and inference across diverse workloads enterprise within AI , , infra .

Speaker #2: based AI Subscription accelerator infrastructure revenue grew by 128% year over year . AI Second , applications These . are AI native or AI powered product offerings addressing specific use cases for and individuals enterprises , including our flagship software products such as Baidu , Baidu Drive , and Digital employee AI is transforming how applications value create , enabling far more powerful that capabilities real world scenarios more effectively .

Speaker #2: address We built a leading and comprehensive portfolio across both individuals and enterprises . Most of our AI applications are based on subscription sticky models , delivering high quality revenue in Q3 AI applications generated revenue of RMB 2.6 billion .

Speaker #2: Third, our AI marketing native services, such as agents and digital humans, continue to scale rapidly. This represents our second growth curve beyond our legacy business.

Speaker #2: These innovative products gaining strong traction with seeking performance are customers driven AI . Native solutions . Customers are increasingly willing to a pay premium for cutting edge AI technology that delivers improvements in productivity , marketing efficiency , and ROI measurable .

Speaker #2: Q3 In from , revenue native AI marketing services reached RMB 2.8 billion , a representing robust 262% year over year increase , accounting for 18% of Baidu online marketing Core revenue .

Speaker #2: Now, let me walk you through the details of our third quarter results. Total revenues were RMB 31.2 billion, decreasing 7% year over year.

Speaker #2: from Revenue Baidu Core was RMB 24.7 billion , decreasing 7% year over year . Baidu Core online marketing revenue was RMB 15.3 billion , decreasing 18% year over year .

Speaker #2: Core Baidu online marketing revenue was RMB 9.3 billion, up 21% year over year, driven by the boost of AI core business within Baidu Core online marketing revenue.

Speaker #2: AI call revenue was RMB 6.2 billion, an increase of 21% year over year. Revenue from it was RMB 6.7 billion, a decrease of 8% year over year.

Speaker #2: Cost of revenues was RMB 18.3 billion, increasing 12% year over year, primarily due to an increase in costs related to AI.

Speaker #2: Cloud business and content costs . Excluding impairment of long lived assets , operating expenses were RMB 11.8 billion , 5% year over increasing year , and Baidu Core operating expenses were RMB 10.4 billion , 5% year over increasing year .

Speaker #2: Core Baidu SG&A expenses were RMB 5.7 billion, increasing 14% year over year, primarily due to an increase in expected credit losses and spending channel expenses.

Speaker #2: accounted for 23% of Baidu Core revenue in the quarter, compared to 19% in the same period last year. Baidu Core R&D expenses were RMB 4.8 billion, decreasing 3% year over year.

Speaker #2: Over R&D accounted for core revenue in 19% of Baidu's quarter, which was flat basically from last year. An impairment of long-lived assets was RMB 16.2 billion, attributable to an impairment loss of the core asset group.

Speaker #2: With our rapid progress in high-performance computing capabilities, we proactively conducted a comprehensive review of our asset base and impaired assets, including but not limited to existing infrastructure that no longer aligns with current computing efficiency requirements.

Speaker #2: This results in a healthier and more asset-optimized portfolio that supports the future growth of our AI-native business. The operating loss was RMB 15.1 billion.

Speaker #2: Baidu Core operating loss was RMB 15.0 billion, and Baidu Core operating margin was down 61%. Excluding impairment of long-lived assets, operating income was RMB 1.1 billion, and Baidu Core operating income was RMB 1.2 billion.

Speaker #2: Non-GAAP operating income was RMB 2.2 billion. Non-GAAP Baidu Core operating income was RMB 2.2 billion, and the non-GAAP Baidu Core operating margin was 9%.

Speaker #2: Total other income was , net , RMB 1.9 billion , compared to RMB 2.7 billion in the same period last year . Income tax benefit was RMB 1.8 billion , compared to income tax expense of RMB 814 million .

Speaker #2: In the same period last year, the net loss attributable to Baidu was RMB 11.2 billion, and the diluted loss per ADS was RMB 33.88.

Speaker #2: The loss attributable to Baidu Core was RMB 11.1 billion, and the net margin for the loss in Baidu Core was 45%. Excluding the impact of long-term impairment of lived assets, the net income attributable to Baidu was RMB 2.6 billion, and the net income attributable to Baidu Core was RMB 2.7 billion.

Speaker #2: Non-GAAP net income attributable to Baidu was RMB 3.8 billion. Non-GAAP diluted earnings per ADS were RMB 11.12. Non-GAAP net income attributable to Core Baidu was RMB 3.8 billion, and the non-GAAP net margin for Core Baidu was 16%.

Speaker #2: We defined cash and investments as total . Cash equivalents , and cash . term investments , net long term time deposits , and maturity held to investments and adjusted long investments term .

Speaker #2: As of September 30, 2025, total cash investments were RMB 296.4 billion, and total cash and investments excluding iQIYI were RMB 298.4 billion.

Speaker #2: Operating cash flow was $1.3 billion, and RMB operating cash flow excluding it was RMB 1.5 billion. Baidu Core had approximately 31,000 employees as of September 30, 2025.

Speaker #2: With that let's operator , questions now .

Speaker #3: . We Thank you will now and question you wish to session If ask a question , answer press star one on your telephone and please your name to be announced wait for to .

Speaker #3: Cancel your... please press star two. If our first question today comes from Alicia Yap, Citigroup. Please go ahead.

Speaker #4: Hello . Thank you . Good management . Thanks my questions . for taking question is on My evening 5.0 . That was unveiled earnings Baidu at recently .

Speaker #4: Then saw how the new model will drive the next stage of world application, as the digital and such. What are the key humans for areas Ernie's iterations?

Speaker #4: And also the focus Thank you future . differentiation ?

Speaker #1: Alicia , this is . Over the past couple of I've been years , Robin repeatedly that we're application driven taking an approach . When it comes to earnings iteration .

Speaker #1: At world . the Just a few days ago , we unveiled earning 5.0 . Our first native omni model model . It has foundation world class in omni levels understanding model writing and instruction .

Speaker #1: creative which are very important capabilities to current and future product our portfolio . From 4.5 and earning X1 in March earning 5.0 in , earning keeps November getting to .

Speaker #1: Better good are a example, earnings; they flaunt deliver contextually accurate and powered by. These dialogues are capabilities rooted in strengths beyond language.

Speaker #1: Our model also drives earnest visual realism language , movement , appearance , and even micro-expressions all synchronized . conversation with the these come elements together , the When performance of our digital is truly humans exceptional and genuinely , capable of driving user engagement and decisions purchasing also powers FM .

Speaker #1: agent Self-evolving that improves significantly agent to be proven very efficiency . effective It has in Earning like industries manufacturing , energy , finance and , and logistics .

Speaker #1: Similarly , transportation AI search our and cloud business benefit earnings from capabilities to . Although earnings delivered remarkable results for this has applications , we see a lot of room for improvement .

Speaker #1: We'd like to see humans sell better than digital agents in many kinds of live e-commerce across streaming in various product categories. We'd like to find better and better solutions for more complicated scenarios.

Speaker #1: In industries . We'd like to see AI generated to content all users interests better than generated coal contents . We'd like to see earnings based agents to be able to tell which piece of content has better quality regarding topics , and so on and so forth These .

Speaker #1: areas where existing none of the do a job good , not even close . we aim to So solve these problems . The application , the application to actually reflects deep approach conviction in where our AI value will ultimately .

Speaker #1: Well , economic value sits today largely at the infrastructure layer in a AI healthier reside ecosystem . The greatest value from should come applications products deliver real impact to users where , advertisers enterprises and Going forward , I .

Speaker #1: Think no model foundation can be better than anyone at any aspect. We will continue to focus on making early strides where it matters most for our business.

Speaker #1: Has Baidu always been a company with a strong technology portfolio? We will continue investing decisively in areas where technology can create measurable real value.

Speaker #1: So close value to staying applications ensures a sustainable path forward for Development AI. Thank you.

Speaker #3: Thank you. And our second question today.

Speaker #3: .

Speaker #5: Thank you , management for taking my questions . So my

Speaker #5: you our .

Speaker #6: Thank you, Lincoln. If you please go over, you will look at this year's performance. Our cloud business is growing well above the industry average.

Speaker #6: for quarter to Well you . quarter some . be Variability Our overall trend there can , but the . And we remain very is growth this trajectory going forward confident about .

Speaker #6: the demand side On or , enterprises applying AI across every aspect of the operations driving strong based , broad demand for centric cloud services AI within cloud , the most area to tied AI workloads is closely scaling the fastest AI .

Speaker #6: Our clients are not only for training models, but increasingly for inference tasks. In Q3, cloud infrastructure revenue from AI reached RMB 4.2 billion, marking a 33% year-over-year increase and outpacing overall cloud growth.

Speaker #6: And their subscription-based AI accelerator revenue grew over infrastructure by 128% year-over-year, accelerating from around quarter resource. This reflects both strong driven analyzing and AI demand of 50% last year, and a revenue mix.

Speaker #6: And they are subscription based AI accelerator revenue grew over infrastructure 128% year year , accelerating from around quarter resource . This reflects both strong driven analyzing , AI demand 50% last and a revenue mix healthier This supported our full momentum is stack by AI capabilities as they are infrastructure .

Speaker #6: Our high performance AI infrastructure , especially self-developed AI computing architecture to to see strong adoption driven by superior performance , efficiency and cost effectiveness .

Speaker #6: Many claims start with then AI expand to layer offerings additional over time , continues infrastructure and . Also , our Mass platform champion has been upgraded be to a centric with agent expanded model libraries , integrated tools and support for complex workflows agent .

Speaker #6: Champion provides best in agent class infrastructure , enabling enterprises to easily build and deploy AI agents at scale . As the layer application , we provide applications that can be readily applied to real business scenarios , our cloud growth is about investment in AI infrastructure .

Speaker #6: not just huge We importance attach applications . We to a comprehensive portfolio of AI solutions products and that is growing very fast , including employee Etienne Muda , FM agent , and digital .

Speaker #6: So firmly we believe AI applications will create substantial value in our cloud businesses in the long term . But to sum up , if we look at basis , we believe that business annualized our full stack AI capabilities and the strong demand for AI centric cloud services will enable healthy , scalable and sustainable growth the in future you .

Speaker #6: . Thank

Speaker #3: Thank you . And our next question comes from Alex Yao JP with Morgan . go Please ahead .

Speaker #7: And good evening Thank you . Operator . , management as Paidu application evolves into AI application and web becomes a built in feature search for AI chatbots .

Speaker #7: The between line and search chatbot is getting blurry are . based on your How how are observation , user behaviors changing and what is your competitive competitive strategy going forward ?

Speaker #7: Thank you .

Speaker #8: Yeah . Hi , Alex . Let me answer your questions and actually working . Is very , very quickly . So it's necessary to stay flexible to offer the different products for different leverage the .

Speaker #8: Baidu we through capabilities two complementary offerings And . The scenarios first which is tribal the chatbot earning system , supports Baidu App conversations .

Speaker #8: thanks all for its deep and with search integration many users assess the earning . assistance Since search so you can This draw on query contexts and interaction history deliver a to more personalized answers and .

Speaker #8: And you also connects to a set of tools through MVP relevant and allowing the users move to seamlessly from information to task discovery completion the .

Speaker #8: assistance is growing quite fast in our and see app conversation rounds have have increased And around five fold year over year , and the duo has surpassed 2 million with the various drone month over month momentum .

Speaker #8: And with that , Mr. Chen to be further continue in the coming few quarters parallel , we also . In offer the earning board as a application increased has around five .

Speaker #8: And with that , Mr. Chen to be further continue in the coming few quarters parallel , we also . In offer the earning board as a application increased standalone capabilities behind earning assistance .

Speaker #8: Boss: Earning a more experimental and innovative approach with a near-term focus on improving retention long term and ambition to compete at the forefront of the travel category.

Speaker #8: And , for example , it provides some cutting edge , multi-modal features such AI as the images or commerce . Generations , and which has been especially popular among the younger users ahead , .

Speaker #8: believe the chatbots are not only we or the And looking ultimate form The future of applications . AI interactions will be multi-modal , real time , generative and interactive .

Speaker #8: And for example , at the most Baidu we have the showcased upgraded Royal House , the digital which Human , capable of the is interactions through time voice and video like a live conversations the real .

Speaker #8: As you may recall, we even had some small technical hiccups during the live demo, which actually proved that it was truly real and not pre-recorded this time.

Speaker #8: To the at human . Very and deliver dynamic and back conversations forth that fill generally So we will human . continue to bring this advanced capabilities into search , making more intelligent , personalized and capable of completing tasks .

Speaker #8: This continuous is intend to capture the long term innovation opportunities in the AI era . And how we strengthen our competitive advantages . Thank you Alex .

Speaker #3: Thank you . Our next question from Gary Morgan Yu at Stanley . ahead Please go .

Speaker #9: Hi . Thank you , management , for the . And also appreciate questions the additional disclosure on AI powered businesses opportunity to ask management .

Speaker #9: share growth the also and the profitability outlook of New AI powered businesses , and how will these categories help accelerate our overall revenue growth going Thank you forward ?

Speaker #9: .

Speaker #8: You. This is Henry. Let me thank you and provide some background on.

Speaker #10: This new AI native use on the investor based feedback . We are seeing a need for greater transparency into growth our high businesses .

Speaker #10: These views organize our portfolios by product nature , giving investors clear visibility into the underlying value drivers . We will maintain both AI native view and existing reporting methods in parallel , offering our on complementary our business perspectives performance .

Speaker #10: From this new perspective , I think we have a rich portfolio of AI empowered assets . Let me give some highlights here First of all , .

Speaker #10: AI for the infra cloud , , this part includes our industry leading AI infrastructures containing self-developed AI computing architecture , cloud infrastructure class platform mass as AI adoption accelerates robust demand for infrastructure is growing and our differentiated capabilities position well us .

Speaker #10: are We capturing long term sustainable revenue and expect margins to improve as utilization increases . Secondly , for the AI , this part includes flagship products .

Speaker #10: For example , of a Baidu , Wang and Baidu Drive , AI has significantly enhanced functionalities across these products . We have one of the China broadest AI application portfolios and the most of these applications are subscription based and contributing to higher quality revenue and margins .

Speaker #10: Third , for the AI native marketing services , including agents and digital humans , this reflects how AI allows greater efficiency and drive the second growth curve in advertising our Throughout business .

Speaker #10: enhanced engagement , conversation , and ROI this AI native quarter , marketing services reached 18% of our Baidu Core marketing revenue , up from 4% a year ago , and we expect penetration to continue rising as adoption broadens .

Speaker #10: are Customers these embracing result driven AI solutions and are willing to pay for tangible gains in productivity and marketing efficiency . Importantly , these AI empowered business reinforce one another across Baidu's ecosystem .

Speaker #10: An AI deeper invests across products , so we expect accelerating growth of these businesses . So when we're looking ahead , we remain confident in their revenue and profitability potential , which we believe we will support for a stronger growth trajectory for Baidu over time .

Speaker #10: Thank you Gary .

Speaker #3: Thank you. Our next question today comes from Myranda Wong with BA Securities. Please go ahead.

Speaker #4: Thank you for taking my question . My question is about the robotaxi business . pulled a goal . Has been accelerating this year .

Speaker #4: So, looking ahead, can management update Apollo's growth goals for this year and next, including your global expansion plans? And how do you think the economics look across different markets?

Speaker #4: And how does management view the long term profitability potential of robotaxi business ? Thank you .

Speaker #1: This is Robin. If you remember, our robotaxi journey started in 2013, so this is our 13th year. Today, Apollo is one of the world's largest robotaxi service providers.

Speaker #1: As of November, we have provided over 17 million rides cumulatively, a level very few players globally have achieved in China.

Speaker #1: We are the undisputed market leader through the first three quarters. This year, our ride volumes were over 15 times greater than our nearest domestic peer, according to publicly disclosed data.

Speaker #1: these All rides are fully driverless , demonstrating unmatched operational scale and excellence technological . Scale matters a lot . The reason we are able to a leading achieve autonomous in technology on a global driving is that we basis have the position scale we have encountered many issues corner cases , others have not seen .

Speaker #1: We were able to train our models to handle cases and become smarter and smarter. I think robotaxi has reached a tipping point here in both the U.S. and China.

Speaker #1: There are enough who have people to chance experience driverless rides , and the word of mouth has created positive social media feedback , which I think will propel the opening or loosening of a related regulations for 2026 and beyond .

Speaker #1: We will continue to scale up our operations both domestically and internationally. We will add more cars in our existing cities and expand to more cities.

Speaker #1: We are more fully driverless, accumulating mileage and further improving our technology based on the operational data we gathered on the road. And yes, we need more data to train our models.

Speaker #1: Better models make the cars safer, faster. We will continue to drive down the cost per mile through technological and operational efficiency.

Speaker #1: Right now , few cities have achieved positive unit economics as we scale , we hope to more cities turn see positive in 2026 .

Speaker #1: Also , we're scaling through flexible business models , including asset light models . We are very are we ready to enter any city quickly once regulatory and market conditions allow .

Speaker #1: As of October , Apollo goes global footprint reaches 22 cities with significant progress in Europe . Middle East and Hong Kong . We confident that UAE continue will to improve as we scale .

Speaker #1: So in summary , for 2026 and beyond , we expect strong growth across three areas rapid growth in ride volumes and fee size , geographic expansion in new markets into new markets and accelerated adoption of new business models .

Speaker #1: We believe Apollo Golf is well positioned for continued global expansion and long-term profitability. Thank you.

Speaker #3: Thank you . And our next today comes from Cheung Thomas at Jefferies . Please ahead go . question

Speaker #11: Hi . Good evening . Thanks , management , for taking my question . My question is about how is AI search monetization and what progressing feedback are you seeing from advertisers and Can AI users ?

Speaker #11: Native marketing services offset traditional ad weaknesses. How should we think about core profitability going forward in advertising? Thank you.

Speaker #8: Hi Thomas , this is Julius . In October , nearly 70% seven zero of the mobile result . search Pages have generated contained AI the multimodal first content .

Speaker #8: This format is quite unique to us, and we are the first, or maybe the only ones doing this. We expect this level to remain relatively stable, as we have largely covered the query types where the AI meaningfully enhances user experiences.

Speaker #8: This format is quite unique to us , and we are the first or maybe only one doing this . And we expect this level to remain relatively stable as we have largely covered the query types where the AI meaningfully user experiences improves the Our focus now has shifted to improving the quality , particularly the rich media content like images , videos , and seen we have very clear content quality .

Speaker #8: This quarter , which translate directly into the better user experiences . And can see that the user retention we is higher and users exposed to AI search are AI search results are initiating 60% more queries and spending more time with us .

Speaker #8: tells us that This users are finding real value in AI search and engaging more deeply on monetization . actively We're testing and seeing some encouraging early results .

Speaker #8: We are testing MCP first, specifically in the commercial modules AI, for search, for example. Our e-commerce in MCP peaked at nearly $6 million in daily GMV during the recent 11 Shopping Double Festival.

Speaker #8: This is a very early stage , but results are quite encouraging . And second , agents for are over generating 25 million in daily revenue , and to grow as expect this we bring more agents we assistance well .

Speaker #8: into the earning third , we have started as digital human live streaming with the real time interaction capabilities . Try to new ways to create engaging commercial experiences and looking ahead , we see the significant potential monetization for AI search and continue to testing actively we will .

Speaker #8: our near-term priority However , still remains the user experiences over immediate monetization with AI , transformation is necessary for long term competitiveness and well , in that create a inevitably near-term pressure on both revenue and So we believe this is the right trade off margins .

Speaker #8: Capture the large opportunities ahead. Thank you.

Speaker #3: our final question today comes from Wei Zhong with UBS . Please go ahead you . And .

Speaker #4: I'm sure . Good evening , management . Thank you for taking my questions . Actually , I have a few questions here . First , just a quick one .

Speaker #4: Could you please explain this quarter's asset impairment and its rationale ? And second , what are CapEx your plans for next year and how should we think about the margin trajectory revenues as AI grow ?

Speaker #4: And lastly, could we have an update, please, on shareholder returns currently once the buyback program expires? Thank you.

Speaker #10: Thanks , John . First of all , on the first question on asset impairment , the background is we are accelerating investments in the latest AI technologies without any hesitation .

Speaker #10: So of this effort as part , we have comprehensive conducted a review of our portfolio infrastructure . Some of the existing assets no longer meet today's computing efficiency requirements .

Speaker #10: So we actually proactively did some impairments after this . One time of impairment . asset base and portfolio profile is in a much Our healthy position .

Speaker #10: And a better aligned with advanced AI computing demands and a higher value application going forward scenarios . Second , on the capital expenditures , we are maintaining a level of high investment .

Speaker #10: Just give one example . Since Baidu earnings launched the March in of 2023 , we have invested well above 100 billion RMB in the AI investment going forward , we will continue increasing our investment in intensity in AI area .

Speaker #10: We do expect to see greater operational our leverage as AI business scales . We're executing on three fronts . First of all , asset review the and impairments have left us with a leaner and more efficient asset base .

Speaker #10: Second, we are investing with a discipline to ensure capital efficiency. And, of course, thirdly, we are enhancing the utilization of our AI infrastructure.

Speaker #10: For example, through dynamic allocation of capacity across internal products and external services. As a result of these initiatives, we believe this represents a lower point for margins.

Speaker #10: Looking into next year , we will strive improve our income operational non-GAAP and to margins as these benefits start to flow through . So on your last point regarding shareholder returns under the plan and program authorized 2023 , we in have already bought back a worth of 2.3 billion USD in shares .

Speaker #10: We currently are reviewing the future buyback mechanism. We understand we also think it is important to provide greater certainty and clarity to reduce the volatility of buyback programs.

Speaker #10: Going forward, we are also actively exploring diversified return mechanisms. For example, setting a policy dividend could potentially enhance these efforts. Together, these initiatives aim to deliver more consistent value to our shareholders.

Speaker #10: Thank you John .